2023 ANNUAL REPORT
reliable.
durable.
growing.
TEN YEARS1
OF STEADY
GROWTH &
FINANCIAL
STABILITY
ADDED
117
PROPERTIES
TOTALLING
11.4M
SQUARE FEET
INVESTED
APPROXIMATELY
$2.6B
ACROSS
126
ACQUISITIONS
22
DEVELOPMENT/
REDEVELOPMENT
PROJECTS
108
INTENSIFICATIONS
AND ONGOING
DEVELOPMENTS
7.03%
CAGR
NET OPERATING
INCOME
(NON-GAAP)2
5.67%
CAGR
AFFO PER UNIT
DILUTED
(NON-GAAP)3
4.66%
CAGR
NET ASSET
VALUE (NAV)
PER UNIT4
LEVERAGE
FROM 49.8% TO
41.1%
AND IMPROVED
CREDIT METRICS
131.2%
TOTAL RETURN
EXCEEDED THE
TOTAL RETURN OF
THE TSX COMPOSITE
OF 99.7% AND THE
TSX CAPPED REIT
INDEX OF 62.2%
RATE OF
DISTRIBUTIONS BY
38%
AFFO
PAYOUT RATIO3
FROM 95% TO
74.8%
DESPITE INCREASING
DISTRIBUTIONS AT
LEAST ONCE EVERY
YEAR SINCE IPO
1 From IPO October 23, 2013, to September 30, 2023.
2 Non-GAAP fnancial measure. Refer to Section 10.1 of the
REIT’s 2023 Management s Discussion & Analysis included
in this Annual Report.
’
3 Non-GAAP ratio. Refer to Section 10.2 of the REIT’s
2023 Management s Discussion & Analysis included
in this Annual Report.
’
4 NAV/unit is equivalent to GAAP book value per unit.
COVER PHOTO: New 350,000 square foot net zero distribution centre in Calgary, AlbertaFEATURED ON THIS PAGE: Canadian Tire Store, Orillia, Ontario
I
ANNUAL REPORT 2023
MA NAGEMENT’ S D I SCU SSI O N AN D ANALYSIS
Table of
Contents
CT REIT
Q4 AND
FULL YEAR
2023
Forward-looking Disclaimer
1.0 Preface
1.1 Basis of Presentation
1.2 Defnitions
1.3 Accounting Estimates and Assumptions
1.4 Quarterly and Annual Comparisons in this MD&A
1.5 Currency and Rounding
1.6 Key Operating Performance Measures and Specifed Financial Measures
1.7 Review and Approval by the Board of Trustees
1.8 Nature and Formation
2.0 Growth Strategy and Objectives
3.0 Summary of Selected Financial and Operational Information
4.0 Portfolio Overview
2023 Investment Activities
4.1 Portfolio Profle
4.2 Revenue by Region
4.3 Six Largest Urban Markets
4.4 Fair Value of Portfolio of Properties
4.5
4.6 Development Activities
4.7
4.8 Lease Maturities
4.9 Top 10 Tenants Excluding CTC Related Tenancies
4.10 Leasing Activities
4.11 Recoverable Capital Costs
Investment and Development Funding
5.0 Results of Operations
5.1 Financial Results for the Three Months and Year Ended December 31, 2023
5.2 Non-GAAP Financial Measures and Non-GAAP Ratios
6.0 Liquidity and Financial Condition
6.1 Liquidity
6.2 Discussion of Cash Flows
6.3 Credit Ratings
6.4
6.5
6.6
6.7 Class C LP Units
Indebtedness and Capital Structure
Interest Coverage Ratio
Indebtedness Ratio
1
2
2
2
2
2
3
3
3
3
4
5
6
6
8
8
9
11
12
13
14
15
15
15
16
16
20
22
22
23
23
24
26
27
27
II
ANNUAL REPORT 2023
MA NAGEMENT’ S D I SCU SSI O N AN D ANALYSIS
Table of
Contents
CT REIT
Q4 AND
FULL YEAR
2023
CONTINUED
6.0 Liquidity and Financial Condition (continued)
6.8 Debentures
6.9 Mortgages Payable
6.10 Credit Facilities
6.11 Capital Strategy
6.12 Commitments and Contingencies
6.13 Base Shelf Prospectus
6.14 Normal Course Issuer Bid
6.15 At-the-Market Program
7.0 Equity
7.1 Authorized Capital and Outstanding Units
7.2 Equity
7.3 Distributions
7.4 Book Value Per Unit
8.0 Related Party Transactions
9.0 Accounting Policies and Estimates
9.1 Signifcant Areas of Estimation
9.2 Standards, Amendments and Interpretations Issued and Adopted
9.3 Standards, Amendments and Interpretations Issued but Not Yet Adopted
10.0 Specifed Financial Measures
10.1 Non-GAAP Financial Measures
10.2 Non-GAAP Ratios
11.0 Selected Quarterly Consolidated Information
12.0 Enterprise Risk Management
13.0 Internal Controls and Procedures
13.1 Disclosure Controls and Procedures
13.2
13.3 Changes in Internal Control Over Financial Reporting
Internal Control Over Financial Reporting
14.0 Forward-looking Information
28
29
29
30
31
31
31
31
32
32
33
34
35
36
38
38
38
38
40
40
47
51
52
57
57
57
58
58
MANAGEMENT'S DISCUSSION AND ANALYSIS
CT REAL ESTATE INVESTMENT TRUST
MANAGEMENT’S DISCUSSION AND ANALYSIS
YEAR ENDED DECEMBER 31, 2023
Forward-looking Disclaimer
This Management’s Discussion and Analysis (“MD&A”) contains statements that are forward-looking. Actual results or events
may differ materially from those forecasted in this disclosure because of the risks and uncertainties associated with the
business of CT Real Estate Investment Trust® and its subsidiaries, (referred to herein as “CT REIT”, “Trust” or “REIT”, unless
the context requires otherwise), and the general economic environment. CT REIT cannot provide any assurance that any
forecasted financial or operational performance will actually be achieved or, if achieved, that it will result in an increase in the
price of CT REIT’s Units. See section 14.0 in this MD&A for a more detailed discussion of the REIT’s use of forward-looking
statements.
CT REIT 2023 ANNUAL REPORT 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
1.0 PREFACE
1.1 Basis of Presentation
The following MD&A is intended to provide readers with an assessment of the performance of CT REIT® for the year ended
December 31, 2023 and should be read in conjunction with the REIT’s audited consolidated financial statements
(“consolidated financial statements”) and accompanying notes for the year ended December 31, 2023 which have been
prepared in accordance with International Financial Reporting Standards (“IFRS”). In addition, the following MD&A should be
read in conjunction with CT REIT’s forward-looking information found in section 14.0 of this MD&A. Information about CT
REIT, including the Annual Information Form for the year ended December 31, 2023 (“AIF”), the consolidated financial
statements as at and for the period ending December 31, 2023 and all other continuous disclosure documents required by the
Canadian securities regulators, can be found on the System for Electronic Document Analysis and Retrieval (“SEDAR+”)
website at www.sedarplus.ca and on CT REIT’s website at www.ctreit.com under the tab “Investors” in the Financial Reporting
section.
1.2 Definitions
In this document, the terms “CT REIT”, “REIT” and “Trust” refer to CT Real Estate Investment Trust® and its subsidiaries
unless the context requires otherwise. In addition, “CTC” refers to Canadian Tire Corporation, Limited, entities that it controls
and their collective businesses unless the context requires otherwise.
This document contains certain trade-marks and trade names of CTC and is the property of CTC. Solely for convenience, the
trade-marks and trade names referred to herein may appear without the ® or ™ symbol.
Any term not defined in this MD&A shall be defined in the Glossary of Terms in the AIF filed on SEDAR+ at www.sedarplus.ca
and on CT REIT’s website at www.ctreit.com under the tab Investors in the Financial Reporting section.
1.3 Accounting Estimates and Assumptions
The preparation of the consolidated financial statements in accordance with IFRS requires management to make judgments
and estimates that affect the application of accounting policies and the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of
revenue and expenses during the reporting period. Refer to section 9.0 in this MD&A for further information.
Financial data included in this MD&A includes material information as of February 13, 2024. Disclosure contained in this
document is current to that date, unless otherwise indicated.
1.4 Quarterly and Annual Comparisons in this MD&A
Unless otherwise indicated, all comparisons of results for three months ended December 31, 2023 (“Q4 2023”) are against
results for three months ended December 31, 2022 (“Q4 2022”) and comparisons of results for the year ended December 31,
2023 are against results for the year ended December 31, 2022.
2 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
1.5 Currency and Rounding
All amounts in this MD&A are in thousands of Canadian dollars, except per unit, unit, per square foot and square foot amounts
or unless otherwise indicated. Rounded numbers are used in this MD&A and, as such, totals may not add up to 100 percent.
1.6 Key Operating Performance Measures and Specified Financial Measures
The key operating performance measures used by management may not be comparable to similar measures presented by
other real estate investment trusts or enterprises. Net income and comprehensive income prepared in accordance with IFRS is
also subject to varying degrees of judgment, and some meaningful differences in accounting policies exist between publicly
traded entities in Canada. Accordingly, net income and comprehensive income as presented by CT REIT may not be
comparable to net income and comprehensive income presented by other real estate investment trusts or enterprises.
1.7 Review and Approval by the Board of Trustees
The Board of Trustees (the “Board”), on the recommendation of its Audit Committee, approved this MD&A for issuance on
February 13, 2024.
1.8 Nature and Formation
CT REIT is an unincorporated, closed-end real estate investment trust established on July 15, 2013 pursuant to a declaration
of trust as amended and restated as of October 22, 2013 and as further amended and restated as of April 5, 2020 and as
may be further amended from time to time (“Declaration of Trust”). CT REIT commenced operations on October 23, 2013.
The principal, registered and head office of CT REIT is located at 2180 Yonge Street, Toronto, Ontario, M4P 2V8. CTC
owned a 68.4% effective interest in CT REIT as at December 31, 2023, consisting of 33,989,508 of the issued and
outstanding units of CT REIT (“Units”) and all of the issued and outstanding Class B limited partnership units (“Class B LP
Units”) of CT REIT Limited Partnership (the “Partnership”), which are economically equivalent to and exchangeable for Units.
The holders of Units and Class B LP Units are collectively referred to as “unitholders”. CTC also owns all of the issued and
outstanding Class C limited partnership units (“Class C LP Units”) of the Partnership. The Units are listed on the Toronto
Stock Exchange (“TSX”) and are traded under the symbol CRT.UN.
CT REIT has one segment for financial reporting purposes which comprises the ownership and management of primarily net
lease single tenant retail investment properties located across Canada.
CT REIT 2023 ANNUAL REPORT 3
MANAGEMENT'S DISCUSSION AND ANALYSIS
2.0 GROWTH STRATEGY AND OBJECTIVES
The following section contains forward-looking information and readers are cautioned that actual results may vary.
The principal objective of CT REIT, as a real estate investment trust investing primarily in net lease, single tenant assets, is to
create unitholder value over the long-term by generating reliable, durable and growing monthly distributions on a tax-efficient
basis. To achieve this objective, management is focused on expanding the REIT’s asset base while also increasing its AFFO
per unit.
Future growth is expected to continue to be achieved from a number of sources including:
1.
the portfolio of Canadian Tire leases, which generally contain contractual rent escalations of approximately 1.5% per
year, on average, and have a weighted average remaining lease term of 8.6 years;
2. contractual arrangements with CTC whereby CT REIT has a right of first offer (“ROFO”) 1 on all CTC properties which
meet the REIT’s investment criteria and through preferential rights, subject to certain exceptions, to participate in the
development of, and to acquire, certain new retail and industrial properties; and
3.
its relationship with CTC, which CT REIT will continue to leverage in order to obtain insights into potential real estate
acquisitions and development opportunities in markets across Canada.
1 CT REIT’s ROFO under the ROFO Agreement continues in effect until the later of October 2023 and such time as CTC ceases to hold a majority of the Voting Units.
4 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
3.0 SUMMARY OF SELECTED FINANCIAL AND OPERATIONAL INFORMATION
Readers are reminded that certain key performance measures may not have standardized meanings under GAAP. For further
information on the REIT’s operating measures, non-GAAP financial measures and non-GAAP ratios, refer to section 1.6,
section 10.1 and section 10.2.
(in thousands of Canadian dollars, except unit, per unit and square footage amounts)
For the periods ended December 31,
Property revenue
EBITFV 1
Net operating income 1
Net income
Net income per unit - basic 2
Net income per unit - diluted 3
Funds from operations 1
FFO per unit - diluted (non-GAAP) 2,4,5
Adjusted funds from operations 1
AFFO per unit - diluted (non-GAAP) 2,4,5
Distributions per unit - paid 2
AFFO payout ratio 4
Excess of AFFO 1 over distributions:
Excess of AFFO over distributions paid 1,6
Per unit - diluted (non-GAAP) 2,4,5
Cash generated from operating activities
Adjusted cashflow from operations 1,7
Weighted average number of units outstanding 2
Basic
Diluted 3
Diluted (non-GAAP) 5
Period-end units outstanding 2
Total assets
Total non-current liabilities
Total indebtedness
Book value per unit 2
Closing market price per unit 2
OTHER INFORMATION
Weighted average interest rate 8
Indebtedness ratio
Interest coverage ratio 4,9
Weighted average term to debt maturity (in years) 8
Gross leasable area (square feet) 10
Occupancy rate 10,11
Year Ended
2023
2022
2021
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
552,772
421,958
438,956
229,434
0.976
0.870
307,914
1.308
283,389
1.203
0.883
73.4 %
75,773
0.322
425,055
279,352
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
532,795
406,459
419,818
324,613
1.387
1.185
296,204
1.264
268,783
1.147
0.854
74.5 %
69,084
0.295
399,273
268,379
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
514,537
393.557
401,079
456,859
1.969
1.635
287,565
1.238
256,504
1.104
0.822
74.5 %
66,002
0.284
407,201
271,948
235,159,596
234,017,377
232,026,661
337,339,769
328,011,845
318,507,219
235,485,646
234,305,809
232,324,806
235,515,483
$ 6,966,564
$ 2,785,861
234,695,777
$ 6,844,789
$ 2,738,956
233,185,145
$ 6,500,102
$ 2,518,598
$ 2,880,994
$ 2,787,634
$ 2,677,861
$
$
16.34
14.65
$
$
16.31
15.59
$
$
15.77
17.32
4.07 %
41.4 %
3.69
5.4
3.99 %
40.7 %
3.67
6.2
3.84 %
41.2 %
3.72
6.8
30,833,056
30,078,518
29,105,050
99.1 %
99.3 %
99.3 %
1 Non-GAAP financial measure. Refer to section 10.1 for further information.
2 Total units means Units and Class B LP Units outstanding.
3 Diluted units determined in accordance with IFRS includes restricted and deferred units issued under various plans and the effect of assuming that all of the
Class C LP Units will be settled with Class B LP Units. Refer to section 7.0.
4 Non-GAAP ratio. Refer to section 10.2 for further information.
5 Diluted units used in calculating non-GAAP measures include restricted and deferred units issued under various plans and exclude the effect of assuming that all
of the Class C LP Units will be settled with Class B LP Units. Refer to section 7.0.
6 Refer to section 7.0 for further information.
7 Comparatives have been restated to conform with current year’s presentation.
8 Excludes the Credit Facilities. Refer to section 6.10 for definition.
9 Refer to section 6.5 for further information.
10 Excludes Development Properties and Properties Under Development. Refer to the Glossary of Terms in the 2023 AIF for definition.
11 Occupancy and other leasing key performance measures have been prepared on a committed basis, which includes the impact of lease agreements contracted on or before
December 31, 2023, December 31, 2022 and December 31, 2021, and vacancies as at the end of those reporting periods.
CT REIT 2023 ANNUAL REPORT 5
MANAGEMENT'S DISCUSSION AND ANALYSIS
4.0 PORTFOLIO OVERVIEW
4.1 Portfolio Profile
The portfolio of Properties, as at December 31, 2023, consisted of 367 Retail Properties, five industrial properties, one mixed-
use commercial property and one Development Property (collectively, “Properties”). The Properties are located in each of the
provinces and in two territories across Canada. The Retail Properties, industrial properties and mixed-use commercial property
contain approximately 30.8 million square feet of gross leasable area (“GLA”).
CT REIT’s consolidated financial position, results of operations and portfolio metrics include the REIT’s one-half interest in
Canada Square, a mixed-use commercial property with future re-development potential, in Toronto, Ontario.
CTC is CT REIT’s most significant tenant. As at December 31, 2023, CTC, including Canadian Tire stores and Other CTC
Banners, leased 28.4 million square feet, representing 92.1% of total GLA (December 31, 2022 - 92.3%) and 91.3% of total
annualized base minimum rent (December 31, 2022 - 91.4%). Approximately 84.6% and 15.4% of the CTC’s total GLA are
attributable to retail and mixed-use, and industrial properties, respectively.
CT REIT’s occupancy, excluding Properties Under Development, is as follows:
(in square feet)
Property Type
Retail Properties
Industrial properties
Mixed-use property 2
Total
As at December 31, 2023
Occupied GLA Occupancy rate 1
GLA
26,074,585
25,871,514
4,557,632
200,839
4,557,632
138,406
30,833,056
30,567,552
99.2 %
100.0 %
68.9 %
99.1 %
1 Occupancy and other leasing key performance measures have been prepared on a committed basis, which includes the impact of lease agreements contracted on or before
December 31, 2023, and vacancies as at the end of the reporting period.
2 Relates to the REIT's one-half interest in Canada Square.
(in square feet)
Property Type
Retail Properties
Industrial properties
Mixed-use property 2
Total
GLA
As at December 31, 2022
Occupied GLA Occupancy rate 1
25,594,741
25,418,807
4,205,749
278,028
4,205,749
256,308
30,078,518
29,880,864
99.3 %
100.0 %
92.2 %
99.3 %
1Occupancy and other leasing key performance measures have been prepared on a committed basis, which includes the impact of lease agreements contracted on or before
December 31, 2022, and vacancies as at the end of the reporting period.
2 Relates to the REIT's one-half interest in Canada Square.
6 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
The REIT’s Property portfolio consists of:
As at
Canadian Tire store single tenant properties
Other single tenant properties
Multi-tenant properties anchored by Canadian Tire store
Multi-tenant properties not anchored by Canadian Tire store
Industrial properties
Mixed-use property
Total operating properties
Development Properties
Total Properties
As at
Gas bars at Retail Properties
December 31, 2023
December 31, 2022
263
27
69
8
5
1
373
1
374
262
27
68
8
4
1
370
3
373
December 31, 2023
December 31, 2022
112
112
Properties by region, as a percentage of total GLA, as of December 31, 2023 are as follows:
Properties by Region ¹ ²
(% of Total GLA)
lantic Canada
Atlantic Canada
8.8%
8.8%
estern Canada
Western Canada
27.1%
27.1%
uebec
Quebec
23.6%
23.6%
Ontario
40.4%
40.4%
1 Excluding Development Properties and Properties Under Development.
2 Occupancy and other leasing key performance measures have been prepared on a committed basis, which includes the impact of lease agreements contracted on or
before December 31, 2023, and vacancies as at the end of the reporting period.
CT REIT 2023 ANNUAL REPORT 7
MANAGEMENT'S DISCUSSION AND ANALYSIS
4.2 Revenue by Region
Properties by region, as a percentage of total annualized base minimum rent, as of December 31, 2023 are as follows:
Properties by Region ¹ ²
(% of Total Annualized Base Minimum Rent)
lantic Canada
Atlantic Canada
7.7%
7.7%
estern Canada
Western Canada
28.5%
28.5%
uebec
Quebec
20.6%
20.6%
nt
Ontario
43.1%
43.1%
1 Excluding Development Properties and Properties Under Development.
2 Occupancy and other leasing key performance measures have been prepared on a committed basis, which includes the impact of lease agreements contracted on or
before December 31, 2023, and vacancies as at the end of the reporting period.
4.3 Six Largest Urban Markets
A significant portion of the Properties are located in the following six largest urban markets:
As at
Vancouver
Edmonton
Calgary
Toronto
Ottawa
Montreal
Percentage of Total Annualized Base Minimum Rent 1, 2
1 Excluding Development Properties and Properties Under Development.
December 31, 2023
December 31, 2022
3.3 %
4.5 %
3.5 %
19.2 %
3.6 %
10.9 %
45.0 %
3.3 %
4.7 %
2.9 %
19.6 %
3.8 %
11.0 %
45.3 %
2 Occupancy and other leasing key performance measures have been prepared on a committed basis, which includes the impact of lease agreements contracted on or before
December 31, 2023 and December 31, 2022, and vacancies as at the end of those reporting periods.
8 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
4.4 Fair Value of Portfolio of Properties
The fair value of the Properties represents 99.6% of the total assets of CT REIT as at December 31, 2023.
Year Ended
December 31, 2023
Year Ended
December 31, 2022
Properties
Income-
producing
Under
properties Development
Total
investment
properties
Properties
Income-
producing
Under
properties Development
Total
investment
properties
$ 6,703,462 $
129,538 $ 6,833,000 $ 6,409,844 $
79,156 $ 6,489,000
(in thousands of Canadian dollars)
Balance, beginning of period
Property investments
Intensifications
Developments
Development land
Capitalized interest and property taxes
Transfers from PUD
Transfers to PUD
Right-of-use assets - lease amendments and
additions
Fair value adjustment on investment
properties
Straight-line rent
Recoverable capital expenditures
Dispositions
Balance, end of period
2,087
—
—
—
—
206,780
(14,405)
(1,805)
(78,636)
(1,700)
34,276
(389)
—
71,211
70,288
325
7,343
(206,780)
14,405
2,087
71,211
70,288
325
7,343
—
—
27,375
—
27,375
136,674
136,674
—
—
—
—
76,246
16,468
3,666
182,672
—
(182,672)
—
—
—
—
—
—
(1,805)
27,047
(78,636)
(1,700)
34,276
(389)
27,845
1,844
26,835
—
—
—
—
—
—
76,246
16,468
3,666
—
—
27,047
27,845
1,844
26,835
—
$ 6,849,670 $
86,330 $ 6,936,000 $ 6,703,462 $
129,538 $ 6,833,000
Investment properties are measured at fair value, determined using the discounted cash flow method. Under this methodology,
discount rates are applied to the projected annual operating cash flows, generally over a minimum term of ten years, and
include a terminal value based on a capitalization rate applied to the estimated net operating income (“NOI”) in the terminal
year. The Property portfolio is internally valued each quarter with external appraisals performed for a portion of the portfolio on
a semi-annual basis. Approximately 80% of the Property portfolio (by value) is appraised externally by independent national
real estate appraisal firms over a four-year period.
Included in CT REIT’s Property portfolio are 12 Properties which are situated on ground leases with remaining current terms of
up to 32 years, and an average remaining current term of approximately 15 years. Assuming all extensions are exercised, the
ground leases have, on average, approximately 31 years of remaining lease term.
CT REIT 2023 ANNUAL REPORT 9
MANAGEMENT'S DISCUSSION AND ANALYSIS
The significant inputs used to determine the fair value of CT REIT’s income-producing properties and Properties Under
Development are as follows:
Number of Properties
Value at the period end
Discount rate 1
Terminal capitalization rate 1
Hold period (years)
1 Weighted average rate.
Year Ended
December 31, 2023
Year Ended
December 31, 2022
374
373
$
6,936,000
$
6,833,000
7.20 %
6.71 %
11
7.01 %
6.51 %
11
The estimates of fair value are sensitive to changes in the investment metrics and forecasted future cash flows for each
Property. The sensitivity analysis in the table below indicates the approximate impact on the fair value of the Property portfolio
resulting from changes in the terminal capitalization and discount rates assuming no changes in other inputs.
Year Ended
December 31, 2023
Change in fair
value
Fair value
Year Ended
December 31, 2022
Change in fair
value
Fair value
$
6,254,000 $
6,466,000
6,692,000
(682,000) $
(470,000)
(244,000)
6,166,000 $
6,380,000
6,588,000
$
6,936,000 $
— $
6,833,000 $
7,200,000
7,485,000
264,000
549,000
7,096,000
7,384,000
$
7,796,000 $
860,000 $
7,701,000 $
(667,000)
(453,000)
(245,000)
—
263,000
551,000
868,000
Rate sensitivity
+ 75 basis points
+ 50 basis points
+ 25 basis points
Period ended
- 25 basis points
- 50 basis points
- 75 basis points
10 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
4.5 2023 Investment Activities
The following table presents income-producing Properties acquired, intensified, developed, or redeveloped during the year
ended December 31, 2023.
(in thousands of Canadian dollars, except for GLA amounts)
Property Location
Moose Jaw, SK 1
Sherbrooke East, QC 1
Fergus, ON 2
Chambly, QC 3
Casselman, ON 3
Drummondville, QC 2, 3
Summerside, PEI 3
Toronto (Islington/401), ON 1, 4
Napanee, ON 2, 3
Sydney, NS 3
Bedford, NS 3
Kingston, ON 1, 4
Invermere, BC 2, 3
Calgary (Dufferin Distribution Centre), AB 1
Pad development 3
Total
1 Development Property.
2 Acquisition of land adjacent to existing Property to facilitate the expansion of a CTR Store.
3 Intensification of an existing income-producing property.
4 Ground lease.
Transaction date
GLA
Total
investment cost
March 2023
April 2023
April 2023
May 2023
May 2023
May 2023
July 2023
September 2023
October 2023
October 2023
October 2023
November 2023
November 2023
December 2023
December 2023
39,462
100,754
—
18,270
22,974
44,722
28,486
129,808
26,645
39,824
—
—
33,015
351,883
2,850
838,693
$
203,549
CT REIT 2023 ANNUAL REPORT 11
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following section contains forward-looking information and readers are cautioned that actual results may vary.
4.6 Development Activities
The following table provides details of the REIT’s development activities as at December 31, 2023. The total “GLA” column
represents the maximum anticipated area of the developments. The “Not committed to lease” column includes areas which
may be under construction but not committed to lease. The “Committed additional investment” column represents the
approximate financial commitment required to complete the “Committed to lease” areas and related site works.
GLA
(in square feet)
Total investment
(in thousands of Canadian dollars)
Development Committed
costs
incurred 7
Total
additional development
costs
investment
Property 1
Granby, QC 2
Kirkland, QC 2
Martensville, SK 2
Victoria (View Royal), BC 2
Kingston, ON 3, 4
Peterborough, ON 2
Fort St John, BC — Phase 2 3
Brampton McLaughlin, ON 2
Burlington North, ON 2
Fergus, ON 2, 5
Port Hawkesbury, NS 2
Barrhaven, ON 2
Dryden, ON 2
Fenelon Falls, ON 2
London North, ON 2
Orleans, ON 2
Valleyfield, QC 2
Toronto (Canada Square), ON 4, 6
TOTAL
Anticipated
69,000
12,000
26,000
113,000
to lease
27,000
32,000
—
32,000
Not
date of Committed committed to
lease
—
—
—
—
—
—
7,000
—
—
—
—
—
—
—
—
—
—
TBD
completion
Q2 2024
Q4 2024
Q4 2024
Q2 2025
Q2 2025
Q2 2025
Q4 2025
Q4 2025
Q4 2025
Q4 2025
Q2 2026
Q2 2026
Q2 2026
Q2 2026
Q2 2026
Q2 2026
Q2 2026
TBD
32,000
43,000
22,000
29,000
13,000
26,000
45,000
35,000
8,000
TBD
564,000
7,000
Total
27,000
69,000
26,000
12,000
113,000
32,000
7,000
32,000
29,000
22,000
13,000
8,000
43,000
26,000
32,000
45,000
35,000
TBD
571,000 $
86,330 $
171,513 $
257,843
1 Properties Under Development under 5,000 square feet that are not anticipated to be completed within the next 12 months have not been included. The previously disclosed Stettler, AB
and Milton, ON intensifications have been removed as the projects are no longer proceeding.
2 Intensification of an existing income-producing Property.
3 Development Property (including development land adjacent to an existing income-producing property).
4 Ground Lease.
5 Acquired development land for the intensification of an existing income-producing Property.
6 Redevelopment Property. Potential building area and investment costs to be determined ("TBD").
7 Includes amounts related to projects in early stages of development.
As at December 31, 2023, CT REIT had committed lease agreements for 564,000 square feet, representing 98.8% of total
GLA under development, of which 100.0% has been leased to CTC. A total of $86,330 has been expended to date, and CT
REIT anticipates investing an additional $171,513 to complete the developments, of which $163,042 is due to CTC. In the next
12 months, the REIT expects to spend approximately $43,000 on these development activities. These commitments do not
include the future development costs related to Canada Square, other than previously approved pre-development consultant
related costs.
12 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
The REIT’s 50% co-ownership interest in Canada Square is being managed by its co-owner in contemplation of its
redevelopment. A development application for the redevelopment of the Canada Square site was originally submitted in
December 2020, and in December 2022, the co-owners submitted an updated development application representing a revised
master plan for the site that incorporated feedback from an extensive stakeholder engagement process. Declining occupancy
and loss of revenue at the Canada Square property are expected to continue until the commencement of construction.
4.7 Investment and Development Funding
Funding of investment and development activities for the year ended December 31, 2023 was as follows:
(in thousands of Canadian dollars)
Funded with working capital to CTC
$
Funded with working capital to third parties
Funded with Credit Facilities/cash
Capitalized interest and property taxes
Property
investments
Development
land Developments
Intensifications
Total
— $
2,087
—
—
— $
46,509 $
70,904 $
117,413
—
325
—
23,779
—
7,343
307
—
—
26,173
325
7,343
Total costs
$
2,087 $
325 $
77,631 $
71,211 $
151,254
2023 Investment and Development Activity
Funding of investment and development activities for the year ended December 31, 2022 was as follows:
2022 Investment and Development Activity
Property
investments
Development
land
Developments
Intensifications
Funded with working capital to CTC
$
8,916 $
3,918 $
14,361 $
70,822 $
Funded with working capital to third parties 1
Funded with Credit Facilities
Capitalized interest and property taxes
Issuance of Class B LP Units to CTC
10,488
2,324
—
5,647
6,324
6,226
—
—
30,073
31,812
3,666
—
6,807
59,045
—
—
Total
98,017
53,692
99,407
3,666
5,647
Total costs
$
27,375 $
16,468 $
79,912 $
136,674 $
260,429
1 Includes $2,448 for the construction of Other CTC Banner stores.
CT REIT 2023 ANNUAL REPORT 13
MANAGEMENT'S DISCUSSION AND ANALYSIS
4.8 Lease Maturities
The weighted average lease term of the portfolio of leases with Canadian Tire is 8.6 years. The weighted average lease term
of all leases in the REIT’s portfolio, excluding Properties Under Development, is 8.4 years.
The following graph presents the lease maturity profile from 2024 to 2044 (assuming tenants do not exercise renewal options
or termination rights, if any) as a percentage of total annualized base minimum rent and GLA as of the time of the lease expiry.
Initial Term Lease Expiry by % of Total Annualized Minimum Rent and GLA1
Initial Term Lease Expiry by % of Total Annualized Minimum Rent and GLA1
Annualized Base Minimum Rent
Annualized Base Minimum Rent
Square Feet (millions)
Square Feet (millions)
12.0%
12.0%
10.0%
10.0%
8.0%
8.0%
6.0%
6.0%
4.0%
4.0%
2.4%
2.4%
2.0%
2.0%
1.0%
1.0%
0.0%
0.0%
11.3%
11.3%
11.1%
11.1%
9.0%
9.0%
6.5%
6.5%
6.5%
6.5%
7.4%
7.4%
6.9%
6.9%
6.8%
6.8%
6.7%
6.7%
6.4%
6.4%
5.2%
5.2%
3.8%
3.8%
2.2%
2.2%
2.1%
2.1%
1.7%
1.7%
0.8%
0.8%
0.9%
0.9%
0.8%
0.8%
0.7%
0.7%
'24
'24
'25
'25
'26
'26
'27
'27
'28
'28
'29
'29
'30
'30
'31
'31
'32
'32
'33
'33
'34
'34
'35
'35
'36
'36
'37
'37
'38
'38
'39
'39
'40
'40
'41
'41
'42
'42
'43
'43
'44
'44
Canadian Tire Store GLA
Canadian Tire Store GLA
Industrial Properties GLA
Industrial Properties GLA
Other GLA
Other GLA
Annualized Base Minimum Rent
Annualized Base Minimum Rent
1 Excludes Properties Under Development.
Total base minimum rent excludes future contractual escalations.
Canada Square is included at the REIT’s one-half interest.
Occupancy and other leasing key performance measures have been prepared on a committed basis, which includes the impact of lease agreements contracted on or before
December 31, 2023, and vacancies as at the end of the reporting period.
Excludes any lease renewal terms.
4.0
4.0
3.5
3.5
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
0.5
0.5
0.0
0.0
14 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
4.9 Top 10 Tenants Excluding CTC Related Tenancies
CT REIT’s 10 largest tenants, excluding all CTC related tenancies, as represented by the percentage of total annualized base
minimum rent, are:
Rank Tenant Name
1
2
3
4
5
6
7
8
9
Save-On-Foods/Buy-Low Foods
Loblaws/No Frills/Shoppers Drug Mart
Winners/Marshalls/HomeSense
Bank of Montreal
Canadian Imperial Bank of Commerce
Sobeys/FreshCo/Farm Boy
Tim Hortons/Burger King/Popeyes
Dollarama
Walmart
10
Best Buy
Total
Percentage of total
annualized base
minimum rent 1
0.65 %
0.58 %
0.51 %
0.46 %
0.41 %
0.41 %
0.33 %
0.28 %
0.28 %
0.22 %
4.13 %
1 Occupancy and other leasing key performance measures have been prepared on a committed basis, which includes the impact of lease agreements contracted on or before
December 31, 2023, and vacancies as at the end of the reporting period.
4.10 Leasing Activities
The future financial performance of CT REIT will be impacted by many factors including occupancy rates and renewing
currently leased space. During the current quarter, the REIT completed one Canadian Tire lease extension. Year to date, CT
REIT completed 28 Canadian Tire lease extensions in 2023. As at December 31, 2023, the REIT’s occupancy rate, excluding
Development Properties and Properties Under Development, was 99.1% (Q4 2022 - 99.3%). Refer to section 4.1 for further
details.
4.11 Recoverable Capital Costs
Many of the capital costs incurred by CT REIT are recoverable from tenants pursuant to the terms of their leases. These
recoveries occur either in the year in which such expenditures are incurred or, in the case of a major item of replacement or
betterment, on a straight-line basis over the expected useful life thereof together with an imputed rate of interest on the
unrecovered balance at any point in time. Capital expenditures of $17,782 and $34,276 (Q4 2022 - $14,903 and YTD 2022 -
$26,835) were incurred during the three months and year ended December 31, 2023, respectively. Most of the REIT’s
recoverable capital expenditures relate to parking lots, roofs and heating, ventilation and air conditioning equipment, the
incurrence of which are typically seasonal in nature. As a result, the actual recoverable capital costs incurred may vary widely
from period to period.
CT REIT 2023 ANNUAL REPORT 15
MANAGEMENT'S DISCUSSION AND ANALYSIS
5.0 RESULTS OF OPERATIONS
5.1 Financial Results for the Three Months and Year Ended December 31, 2023
CT REIT’s financial results for the three months and year ended December 31, 2023 and December 31, 2022 are summarized
below:
(in thousands of Canadian dollars, except per unit
amounts)
Three Months Ended
Year Ended
For the periods ended December 31,
2023
2022 Change ¹
2023
2022 Change ¹
Property revenue
Property expense
General and administrative expense
Net interest and other financing charges
Fair value adjustment on investment properties
Net income and comprehensive income
Net income per unit - basic
Net income per unit - diluted
¹ NM - not meaningful.
Property Revenue
$
139,968 $
135,175
3.5 % $
552,772 $
532,795
3.7 %
(28,842)
(4,128)
(29,425)
(39,334)
(27,833)
3.6 %
(115,523)
(111,133)
4.0 %
(4,030)
2.4 %
(15,237)
(14,478)
5.2 %
(27,703)
6.2 %
(113,942)
(110,416)
3.2 %
(860)
NM
(78,636)
27,845
NM
38,239 $
74,749
(48.8)% $
229,434 $
324,613
(29.3)%
0.162 $
0.161 $
0.319
(49.2)% $
0.276
(41.7)% $
0.976 $
0.870 $
1.387
(29.6)%
1.185
(26.6)%
$
$
$
Property revenue includes all amounts earned from tenants pursuant to lease agreements including base rent, property taxes,
operating costs and other recoveries. Many of CT REIT’s expenses are recoverable from tenants pursuant to the terms of their
leases, with the REIT absorbing these expenses to the extent that vacancies exist.
Total revenue for the three months ended December 31, 2023 was $139,968 which was $4,793 (3.5%) higher compared to the
same period in the prior year, primarily due to the intensifications and developments completed during 2022 and 2023, higher
recovery of capital expenditures and interest earned on the unrecovered balance and the contractual rent escalations from
Canadian Tire leases, partially offset by vacancy at Canada Square. Total revenue for the three months ended December 31,
2023 also included property operating expense recoveries in the amount of $27,048 (Q4 2022 - $26,353).
Total revenue for the year ended December 31, 2023 was $552,772 which was $19,977 (3.7%) higher compared to the same
period in the prior year, primarily due to the intensifications and developments completed during 2022 and 2023, higher
recovery of capital expenditures and interest earned on the unrecovered balance and the contractual rent escalations from
Canadian Tire leases, partially offset by vacancy at Canada Square. Total revenue for the year ended December 31, 2023
also included property operating expense recoveries in the amount of $108,270 (Q4 2022 - $106,687).
The total amount of base rent to be received from operating leases is recognized on a straight-line basis over the term of the
lease. For the three months ended December 31, 2023, straight-line rent of $(386) (Q4 2022 - $579) was included in property
revenue. For the year ended December 31, 2023, straight-line rent of $(1,707) (2022 - $1,844) was included in total property
revenue.
16 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
Property Expense
Property expense consists primarily of property taxes and operating costs. The majority of property expenses are recoverable
from tenants with the REIT absorbing these expenses to the extent that vacancies exist.
Property expense for the three months ended December 31, 2023, increased by $1,009 (3.6%) compared to the same period
in the prior year primarily due to higher property taxes resulting from reassessed values associated with intensifications and
developments completed in 2022 and 2023.
Property expense for the year ended December 31, 2023, increased by $4,390 (4.0%) compared to the same period in the
prior year primarily due to higher property taxes resulting from reassessed values associated with intensifications and
developments completed in 2022 and 2023.
General and Administrative Expense
CT REIT has three primary categories of general and administrative expense, namely: (i) personnel costs; (ii) Service
Agreement expense, which may fluctuate depending on when such costs are incurred; and (iii) public entity and other costs,
including external audit fees, trustee compensation expense, legal and professional fees, travel and income tax expense
(recovery) related to CT REIT GP Corp.’s (“GP”) activities. The personnel and public entity and other costs reflect the
expenses related to ongoing operations of CT REIT. The Service Agreement expense costs are largely related to certain tax,
treasury, internal audit and other support services provided by CTC to the REIT pursuant to the Services Agreement, as
further described in section 8.0 of this MD&A.
(in thousands of Canadian dollars)
Three Months Ended
Year Ended
For the periods ended December 31,
2023
2022 Change
2023
2022 Change
Personnel expense 1
Service Agreement expense
Public entity and other 1
$
2,912
$
3,007
(3.2)% $
9,825
$
181
1,035
233
790
(22.3)%
31.0 %
1,094
4,318
9,708
1,094
3,676
General and administrative expense
$
4,128
$
4,030
2.4 % $
15,237
$
14,478
1.2 %
— %
17.5 %
5.2 %
As a percent of property revenue
Adjusted general and administrative expense as a
percent of property revenue 2, 3
1 Includes unit-based awards, including loss (gain) adjustments as a result of the change in the fair market value of the Units of $523 (Q4 2022 - $276) and $(625) (YTD 2022 - $(866)) for
3.0 %
2.7 %
2.9 %
2.8 %
2.8 %
2.9 %
2.6 %
2.9 %
the three months and year ended December 31, 2023.
2 Adjusted for fair value adjustments on unit-based awards.
3 Non-GAAP ratio. Refer to section 10.2 for further information.
General and administrative expenses amounted to $4,128 or 2.9% of the property revenue for the three months ended
December 31, 2023 which was comparable with the same period in the prior year.
General and administrative expenses amounted to $15,237 or 2.8% of property revenue for the year ended December 31,
2023 which is $759 (5.2%) higher compared to the same period in the prior year primarily due to higher legal and professional
fees, increased compensation costs due to the variable component of compensation awards; partially offset by decreased
personnel costs from CEO retirement expenses in 2022.
CT REIT 2023 ANNUAL REPORT 17
MANAGEMENT'S DISCUSSION AND ANALYSIS
Net Interest and Other Financing Charges
As at December 31, 2023 the Partnership had 1,451,550 Class C LP Units outstanding with a face value of $1,451,550 and
bearing a weighted average distribution rate of 4.41% per annum. The Class C LP Units are subject to redemption rights.
Accordingly, the Class C LP Units are classified as financial liabilities and distributions on the Class C LP Units are presented
in the net interest and other financing charges in the consolidated statements of income and comprehensive income.
Net interest and other financing charges are comprised of the following:
(in thousands of Canadian dollars)
Three Months Ended
Year Ended
For the periods ended December 31,
2023
2022 Change ¹
2023
2022 Change ¹
Interest on Class C LP Units 2
$
15,990 $
15,990
— % $
63,962 $
63,962
Interest and financing costs - debentures
Interest and financing costs - Credit Facilities 3
Interest on mortgages payable
Interest on lease liabilities
11,677
1,965
42
1,384
9,853
1,011
797
752
18.5 %
94.4 %
(94.7)%
84.0 %
41,240
39,968
8,905
938
5,201
2,042
2,377
3,964
$
31,058 $
28,403
9.3 % $
120,246 $
112,313
— %
3.2 %
NM
(60.5)%
31.2 %
7.1 %
Less: capitalized interest
(1,263)
(660)
91.4 %
(5,764)
(1,641)
NM
Interest expense and other financing charges
$
29,795 $
27,743
7.4 % $
114,482
$
110,672
3.4 %
Less: interest income
(370)
(40)
NM
(540)
(256)
NM
Net interest and other financing charges
$
29,425 $
27,703
6.2 % $
113,942 $
110,416
3.2 %
¹ NM - not meaningful.
2 CTC elected to defer receipt of distributions on Series 3-9 and Series 16 and 19 of the Class C LP Units for the three months and year ended December 31, 2023 in the amount of
$15,990 (Q4 2022 - $15,990) and $58,631 (YTD 2022 - $58,631), until the first business day following the end of the fiscal year. The deferred distributions have been netted against
interest payable on Class C LP Units and are included under the heading “other liabilities” on the consolidated balance sheets.
3 See section 6.10 for details on Credit Facilities.
Net interest and other financing charges for the three months ended December 31, 2023 was $1,722 (6.2%) higher compared
to the same period in the prior year as a result of the issuance of $250,000 Series I senior unsecured debentures with a
coupon of 5.828% per annum, which closed on November 17, 2023, and higher Credit Facilities utilization to fund 2023
developments and intensifications, partially offset by lower interest costs as a result of a mortgage which matured and was
repaid in Q1 2023, and capitalized interest on Properties Under Development.
Net interest and other financing charges for the year ended December 31, 2023 was $3,526 (3.2%) higher compared to the
same period in the prior year as a result of higher Credit Facilities utilization to fund 2023 developments and intensifications,
increase in the interest rate on the Credit Facilities, and the issuance of $250,000 Series I senior unsecured debentures with a
coupon of 5.828% per annum, which closed on November 17, 2023, partially offset by capitalized interest on Properties Under
Development, lower interest costs as a result of a mortgage which matured and was repaid in Q1 2023, and the prepayment
cost of $744 related to the early redemption of the $150,000 Series A senior unsecured debentures with a coupon of 2.853%,
which occurred in the first quarter of 2022.
18 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
Fair Value Adjustment on Investment Properties
The fair value adjustment on investment properties for the three months ended December 31, 2023 was $(39,334), a decrease
of $38,474 compared to the adjustment in the same period in the prior year. The decrease in the fair value adjustment on
investment properties is primarily driven by changes to underlying investment metrics for certain Retail Properties and one
industrial property within the portfolio, offset by changes to underlying cash flow assumptions for Retail Properties.
The fair value adjustment on investment properties for the year ended December 31, 2023 was $(78,636), a decrease of
$106,481 compared to the adjustment in the same period in the prior year. The decrease in the fair value adjustment on
investment properties is primarily driven by changes to underlying investment metrics for certain Retail Properties and one
industrial property within the portfolio, offset by changes to underlying cash flow assumptions for Retail Properties.
Income Tax Expense
Management operates CT REIT in a manner that enables the REIT to continue to qualify as a real estate investment trust
pursuant to the Income Tax Act (Canada) (“ITA”). CT REIT distributes 100% of its taxable income to unitholders and therefore
does not incur income tax expense in relation to its activities. The REIT only records income tax expense or recovery in
relation to the GP activities.
If CT REIT fails to distribute the required amount of taxable income to unitholders, or if CT REIT fails to qualify as a “real estate
investment trust” under the ITA, substantial adverse tax consequences may occur. Refer to section 12.0 for further information.
Net Income
(in thousands of Canadian dollars, except per unit amounts)
Three Months Ended
Year Ended
For the periods ended December 31,
Net income and comprehensive income
Net income per unit - basic
Net income per unit - diluted
2023
2022 Change
2023
2022 Change
38,239 $
74,749
(48.8)% $ 229,434 $ 324,613
(29.3)%
0.162 $
0.319
(49.2)% $
0.976 $
1.387
(29.6)%
0.161 $
0.276
(41.7)% $
0.870 $
1.185
(26.6)%
$
$
$
Net income decreased by $36,510 (48.8%) for the three months ended December 31, 2023 compared to the same period in
the prior year due to the decrease in the fair value adjustment on investment properties, an increase in the interest rate on the
Credit Facilities and higher Credit Facilities utilization to fund 2023 developments and intensifications, partially offset by higher
property revenue from intensifications and developments completed in 2022 and 2023.
Net income decreased by $95,179 (29.3%) for the year ended December 31, 2023 compared to the same period in the prior
year due to the decrease in the fair value adjustment on investment properties, an increase in the interest rate on the Credit
Facilities and higher Credit Facilities utilization to fund 2023 developments and intensifications, partially offset by higher
property revenue from intensifications and developments completed in 2022 and 2023.
CT REIT 2023 ANNUAL REPORT 19
MANAGEMENT'S DISCUSSION AND ANALYSIS
5.2 Non-GAAP Financial Measures and Non-GAAP Ratios
In addition to the GAAP measures previously described, management uses non-GAAP financial measures and non-GAAP
ratios in assessing the financial performance of CT REIT. Refer to section 1.0 and section 10.0 in this MD&A for further
information.
(in thousands of Canadian dollars, except
per unit amounts)
For the periods ended December 31,
Net operating income 1
Same store NOI 1
Same property NOI 1
Funds from operations 1
FFO per unit - basic 2
FFO per unit - diluted (non-GAAP) 2
Adjusted funds from operations 1
AFFO per unit - basic 2
AFFO per unit - diluted (non-GAAP) 2
AFFO payout ratio 2
ACFO 1,3
EBITFV 1
Three Months Ended
Year Ended
2023
2022
Change
2023
2022
Change
$
$
$
$
$
$
$
$
$
$
$
111,512
107,552
109,694
77,704
0.330
0.330
71,474
0.304
0.303
74.3 %
72,851
107,263
$
$
$
$
$
$
$
$
$
$
$
106,763
105,210
105,875
75,570
0.322
0.322
4.4 % $
438,956
2.2 % $
421,694
3.6 % $
432,982
2.8 % $
307,914
2.5 % $
2.5 % $
1.309
1.308
68,515
4.3 % $
283,389
0.292
0.292
4.1 % $
3.8 % $
1.205
1.203
74.3 %
— %
73.4 %
89,461
(18.6)% $
279,352
103,133
4.0 % $
421,958
$
$
$
$
$
$
$
$
$
$
$
419,818
411,478
414,999
296,204
1.266
1.264
268,783
1.149
1.147
4.6 %
2.5 %
4.3 %
4.0 %
3.4 %
3.5 %
5.4 %
4.9 %
4.9 %
74.5 %
(1.1)%
268,379
406,459
4.1 %
3.8 %
1 Non-GAAP financial measure. Refer to section 10.1 for further information.
2 Non-GAAP ratio. Refer to section 10.2 for further information.
3 Comparatives have been restated to conform with current year’s presentation.
Net Operating Income
Same store NOI for the three months ended December 31, 2023 increased by $2,342 (2.2%), when compared to the prior year
primarily for the following reasons:
•
•
contractual rent escalations of 1.5% per year, on average, contained within the Canadian Tire leases, which are
generally effective January 1st, contributed $1,611 to NOI growth; and
increased recovery of capital expenditures and interest earned on the unrecovered balance contributed $886 to NOI.
Same property NOI for the three months ended December 31, 2023, increased $3,819 (3.6%) compared to the prior year due
to the increase in same store NOI noted above, as well as an increase in NOI of $1,477 from the intensifications completed in
2023 and 2022.
NOI for the three months ended December 31, 2023 increased by $4,749 (4.4%) compared to the same period in the prior
year primarily due to an increase in same property NOI, coupled with an increase in NOI due to developed properties.
20 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
Same store NOI for the year ended December 31, 2023 increased $10,216 (2.5%), when compared to the prior year primarily
for the following reasons:
•
•
•
contractual rent escalations of 1.5% per year, on average, contained within the Canadian Tire leases, which are
generally effective January 1st, contributed $5,997 to NOI growth; and
increased recovery of capital expenditures and interest earned on the unrecovered balance contributed $5,512 to
NOI; partially offset by
recovery adjustment to operating expenses and property taxes, which reduced NOI by $1,302.
Same property NOI for the year ended December 31, 2023 increased $17,983 (4.3%) compared to the prior year due to the
increase in same store NOI noted above, as well as an increase in NOI of $7,767 from the intensifications completed in 2023
and 2022.
NOI for the year ended December 31, 2023 increased by $19,138 (4.6%) compared to the same period in the prior year
primarily due to an increase in same property NOI, coupled with an increase in NOI due to developed properties.
Funds From Operations
FFO for the three months ended December 31, 2023 was $77,704 which was $2,134 (2.8%) higher than the same period in
2022 primarily due to the impact of NOI variances, partially offset by increased interest costs on the public debentures, and an
increase in costs related to the Credit Facilities due to higher utilization and a higher rate of interest. FFO per unit - diluted
(non-GAAP) for the three months ended December 31, 2023 was $0.330, which was $0.008 (2.5%) higher than the same
period in 2022 due to the growth of FFO exceeding the growth in the weighted average units outstanding - diluted (non-
GAAP).
FFO for the year ended December 31, 2023 was $307,914 which was $11,710 (4.0%) higher than the same period in 2022,
primarily due to the impact of NOI variances, partially offset by increased interest costs on the public debentures, and an
increase in costs related to the Credit Facilities due to higher utilization and a higher rate of interest. FFO per unit - diluted
(non-GAAP) for the year ended December 31, 2023 was $1.308, which was $0.044 (3.5%) higher than the same period in
2022 due to the growth of FFO exceeding the growth in the weighted average units outstanding - diluted (non-GAAP).
Adjusted Funds From Operations
AFFO for the three months ended December 31, 2023 was $71,474 which was $2,959 (4.3%) higher than the same period in
2022, primarily due to the impact of NOI variances, partially offset by increased interest costs on the public debentures, and an
increase in costs related to the Credit Facilities due to higher utilization and a higher rate of interest. AFFO per unit - diluted
(non-GAAP) was $0.303, which was $0.011 (3.8%) higher than the same period in 2022 due to the growth of AFFO exceeding
the growth in the weighted average units outstanding - diluted (non-GAAP).
AFFO for the year ended December 31, 2023 was $283,389 which was $14,606 (5.4%) higher than the same period in 2022,
primarily due to the impact of NOI variances, partially offset by increased interest costs on the public debentures, and an
increase in costs related to the Credit Facilities due to higher utilization and a higher rate of interest. AFFO per unit - diluted
CT REIT 2023 ANNUAL REPORT 21
MANAGEMENT'S DISCUSSION AND ANALYSIS
(non-GAAP) was $1.203, which was $0.056 (4.9%) higher than the same period in 2022 due to the growth of AFFO exceeding
the growth in the weighted average units outstanding - diluted (non-GAAP).
Adjusted Funds From Operations Payout Ratio
The AFFO payout ratio for the three months ended December 31, 2023 was 74.3%, which is consistent with the same period
in 2022.
The AFFO payout ratio for the year ended December 31, 2023 was 73.4%, a decrease of 1.1% from the same period in 2022
due to the rate of increase in AFFO per unit exceeding the increase in the monthly distributions.
Adjusted Cashflow From Operations
ACFO for the three months ended December 31, 2023 decreased by $16,610 or 18.6% over the same period in 2022 primarily
due to the decrease in cash generated from operating activities and a decrease in non-operating adjustments to changes in
working capital and other.
ACFO for the year ended December 31, 2023 increased by $10,973 or 4.1% over the same period in 2022 primarily due to an
increase in cash generated from operating activities, partially offset by a decrease in non-operating adjustments to changes in
working capital and other and higher interest expense.
Earnings Before Interest and Other Financing Costs, Taxes and Fair Value Adjustments
EBITFV for the three months ended December 31, 2023 increased by $4,130 (4.0%) over the same period in 2022, primarily
due to the impact of NOI variances, discussed earlier.
EBITFV for the year ended December 31, 2023 increased by $15,499 (3.8%) over the same period in 2022, primarily due to
the impact of NOI variances, discussed earlier.
6.0
LIQUIDITY AND FINANCIAL CONDITION
The following section contains forward-looking information and readers are cautioned that actual results may vary.
6.1 Liquidity
CT REIT intends to fund capital expenditures for acquisitions and development activities through a combination of (i) cash on
hand, (ii) issuances of Class B LP Units and/or Class C LP Units, (iii) draws on the Credit Facilities, (iv) assumption of debt,
and/or (v) new public or private issuance of debt or equity.
(in thousands of Canadian dollars)
As at
Cash and cash equivalents
Unused portion of available Bank Credit Facility 1
Liquidity
1 See section 6.10 for details on Credit Facilities.
22 CT REIT 2023 ANNUAL REPORT
December 31, 2023
December 31, 2022
$
$
20,766 $
296,868
317,634
$
2,611
195,117
197,728
MANAGEMENT'S DISCUSSION AND ANALYSIS
Cash flow generated from operating the Property portfolio represents the primary source of liquidity to service debt and to fund
planned maintenance expenditures, leasing costs, general and administrative expenses and distributions. Other sources being
interest income, as well as cash on hand.
(in thousands of Canadian dollars)
For the periods ended December 31,
Three Months Ended
Year Ended
2023
2022 Change ¹
2023
2022 Change ¹
Cash generated from operating activities
$ 118,316 $ 123,937
(4.5)% $ 425,055 $ 399,273
6.5 %
Cash used for investing activities
Cash used for financing activities
(55,591)
(89,108)
(37.6)%
(186,529)
(219,617)
(15.1)%
(59,017)
(38,300)
54.1 %
(220,371)
(180,600)
22.0 %
Cash generated/(used) in the period
$
3,708 $
(3,471)
NM $
18,155 $
(944)
NM
¹ NM - not meaningful.
6.2 Discussion of Cash Flows
Cash generated in the three months ended December 31, 2023 of $3,708 was primarily the result of cash generated from the
issuance of the Series I senior unsecured debentures and operating activities, partially offset by cash used for repayment on
the Credit Facilities, distribution payments, development and intensification of investment properties, capital expenditure and
interest payments.
Cash generated in the year ended December 31, 2023 of $18,155 was primarily the result of cash generated from operating
activities and the issuance of the Series I senior unsecured debentures, partially offset by cash used for distribution payments,
development and intensification of investment properties, repayment on the Credit Facilities, repayment of a mortgage which
matured, interest payments on the debentures and capital expenditure.
6.3 Credit Ratings
The senior unsecured debt of CT REIT is rated by S&P Global Ratings (“S&P”) and by Morningstar DBRS, two independent
credit rating agencies which provide issuer credit ratings and credit ratings of debt securities of an issuer. A credit rating
generally provides an indication of the risk that the borrower will not fulfill its full obligations in a timely manner with respect to
both interest and principal commitments. Rating categories range from highest credit quality (generally “AAA”) to default in
payment (generally “D”).
The credit ratings of CT REIT are related to and currently equivalent to those of CTC, as CTC holds a significant ownership
position in CT REIT and CTC is CT REIT’s most significant tenant.
The following table sets out CT REIT’s issuer and senior unsecured debenture credit ratings:
Issuer Rating
Senior unsecured debentures
Morningstar DBRS
S&P
Credit Rating
BBB
BBB
Trend
Stable
Stable
Credit Rating
BBB
BBB
Outlook
Stable
-
CT REIT 2023 ANNUAL REPORT 23
MANAGEMENT'S DISCUSSION AND ANALYSIS
6.4 Indebtedness and Capital Structure
CT REIT’s indebtedness and capital structure is as follows:
(in thousands of Canadian dollars)
As at
Class C LP Units
Mortgages payable
Debentures
Credit Facilities 1
Total indebtedness
Unitholders’ equity
Non-controlling interests
Total capital under
management
1 See section 6.10 for details on Credit Facilities.
December 31, 2023
December 31, 2022
$
1,451,550 $
1,451,550
9,131
1,420,313
—
2,880,994 $
1,707,336
2,140,433
6,728,763
$
65,295
1,170,905
99,884
2,787,634
1,698,250
2,128,923
6,614,807
$
$
CT REIT’s total indebtedness as at December 31, 2023 was higher than December 31, 2022 primarily due to the issuance of
Series I senior unsecured debentures, partially offset by the repayments of amounts drawn on the Bank Credit Facility and a
mortgage which matured in Q1 2023. Refer to section 6.6 of this MD&A for further details.
CT REIT’s unitholders’ equity and non-controlling interests as at December 31, 2023 increased as compared to December 31,
2022 primarily as a result of net income exceeding distributions.
Future payments in respect of CT REIT’s indebtedness as at December 31, 2023 are as follows:
(in thousands of Canadian dollars)
2024
2025
2026
2027
2028 and thereafter
Total contractual obligation
Unamortized portion of mark to market on mortgages
payable assumed on the acquisition of properties
Unamortized transaction costs
1 Refer to section 6.8.
Mortgages payable
Principal
Amortization
Maturities
Class C LP
Units Debentures 1
Total
$
391 $
— $
200,000 $
— $
200,391
403
103
—
—
—
7,967
—
—
251,550
—
—
200,000
200,000
375,000
451,953
208,070
375,000
1,000,000
650,000
1,650,000
$
897 $
7,967 $
1,451,550 $
1,425,000 $
2,885,414
—
—
267
—
—
—
—
(4,687)
267
(4,687)
$
897 $
8,234 $
1,451,550 $
1,420,313 $
2,880,994
Interest rates on CT REIT’s indebtedness range from 2.37% to 5.83%. The maturity dates on the indebtedness range from
May 2024 to May 2038.
Total indebtedness as at December 31, 2023 had a weighted average interest rate of 4.07% and a weighted average term to
maturity of 5.4 years, excluding the Credit Facilities.
24 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
As at December 31, 2023, variable rate and fixed rate indebtedness were nil and $2,880,994, respectively.
As at
Variable rate indebtedness
Total indebtedness
Variable
rate
indebtedness / total indebtedness
December 31, 2023
December 31, 2022
$
—
$
2,880,994
155,584
2,787,634
0.00 %
5.58 %
CT REIT’s variable rate debt-to-total indebtedness ratio as at December 31, 2023 decreased as compared to December 31,
2022 primarily due to repayment on the Bank Credit Facility and a mortgage which matured.
The following table presents the contractual obligations of CT REIT:
Class C LP Units 1
Debentures
Future payments on Class C LP
Units 1
Future interest on debentures
Future undiscounted lease liabilities
payments
Mortgages payable
Future payment other liabilities
Distributions payable 2
Payable on Class C LP Units, net of
loans receivable
Future interest payments on
mortgages payable
Total
2024
2025
2026
2027
2028
2029 and
thereafter
Total
$
200,000 $
251,550 $
— $
— $
200,000 $
800,000 $ 1,451,550
—
200,000
200,000
375,000
250,000
400,000
1,425,000
58,712
53,132
6,067
391
100,039
17,628
5,331
51,484
49,605
6,425
403
5,198
—
—
280
267
49,000
42,789
6,550
8,070
—
—
—
65
49,000
36,464
43,750
236,667
488,613
17,759
14,686
214,435
6,568
6,551
217,096
249,257
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8,864
105,237
17,628
5,331
612
$
441,580
$
564,932
$
306,474
$
467,032
$
518,060
$
1,668,449
$
3,966,527
1 Assumes redemption on Current Fixed Rate Period for each series.
2 On Units and Class B LP Units.
The table below presents CT REIT’s interest in investment properties at fair value that are available to it to finance and/or
refinance its debt as at December 31, 2023:
(in thousands of Canadian dollars)
Unencumbered investment properties
Encumbered investment properties
Total investment properties
Number of
properties
Fair value of
investment Percentage of
total assets
properties
Mortgages
payable
Loan to value
ratio
373 $
6,915,699
1
20,301
374
$
6,936,000
99.3 % $
0.3 %
99.6 %
$
—
9,131
9,131
—
45.0 %
0.1 %
CT REIT 2023 ANNUAL REPORT 25
MANAGEMENT'S DISCUSSION AND ANALYSIS
The table below presents CT REIT’s secured debt as a percentage of total indebtedness:
(in thousands of Canadian dollars)
As at
Secured debt
Total indebtedness
Secured debt / total indebtedness
December 31, 2023
December 31, 2022
$
9,131
$
2,880,994
65,295
2,787,634
0.32 %
2.34 %
CT REIT’s secured debt-to-total indebtedness ratio as of December 31, 2023 decreased as compared to December 31, 2022
primarily due to the repayment of a secured mortgage that matured.
Indebtedness to EBITFV ratios are used to measure an entity’s ability to meet its debt obligations. Generally, the lower the
ratio, the less an entity is leveraged which increases its ability to pay off its debts.
The table below presents CT REIT’s indebtedness to EBITFV ratio:
(in thousands of Canadian dollars)
As at
Total indebtedness
EBITFV 1
Total indebtedness / EBITFV 2
1 Non-GAAP financial measure. Refer to section 10.1 for further information.
2 Non-GAAP ratio. Refer to section 10.2 for further information.
December 31, 2023
December 31, 2022
$
2,880,994 $
421,958
6.83
2,787,634
406,459
6.86
CT REIT’s indebtedness to EBITFV ratio as at December 31, 2023 was in line with December 31, 2022.
6.5 Interest Coverage Ratio
Interest coverage ratios are used to measure an entity’s ability to service its debt. Generally, the higher the ratio is, the lower
the risk of default on debt. The ratio is calculated as follows:
(in thousands of Canadian dollars)
For the periods ended December 31,
EBITFV 1 (A)
Interest expense and other financing charges (B)
Interest
coverage
2
ratio
(A)/(B)
1 Non-GAAP financial measure. Refer to section 10.1 for further information.
2 Non-GAAP ratio. Refer to section 10.2 for further information.
Three Months Ended
Year Ended
2023
2022
2023
$
$
107,263 $
103,133 $
421,958 $
29,795 $
27,743 $
114,482 $
3.60
3.72
3.69
2022
406,459
110,672
3.67
The decrease in interest coverage ratio for the three months ended December 31, 2023, as compared to the same period in
2022, is primarily due to the growth in interest expense exceeding the growth of EBITFV.
The increase in interest coverage ratio for the year ended December 31, 2023, as compared to the same period in 2022, is
primarily due to the growth of EBITFV exceeding the growth in interest expense.
26 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
6.6 Indebtedness Ratio
CT REIT has adopted an indebtedness ratio guideline which management uses as a measure to evaluate its leverage and the
strength of its equity position, expressed as a percentage of total assets. This ratio can help investors determine the REIT’s
risk levels. CT REIT’s Declaration of Trust and the Trust Indenture limit its indebtedness (plus the aggregate par value of the
Class C LP Units) to a maximum of 60% of the gross book value, excluding convertible debentures, and 65% including
convertible debentures. Gross book value is defined as total assets as reported on the latest consolidated balance sheets.
CT REIT calculates its indebtedness ratio as follows:
(in thousands of Canadian dollars)
As at
Total indebtedness 1 (A)
Total assets (B)
Indebtedness
ratio (A)/(B)
December 31, 2023
December 31, 2022
$
$
2,880,994
6,966,564
$
$
2,787,634
6,844,789
41.4 %
40.7 %
1 Total indebtedness reflects the value of the Class C LP Units, mortgages payable, debentures and draws on the Credit Facilities.
The indebtedness ratio as at December 31, 2023 increased compared to the indebtedness ratio as at December 31, 2022
primarily due to issuance of the Series I senior unsecured debentures, as well as a decrease in fair value on investment
properties.
6.7 Class C LP Units
As at December 31, 2023, there were 1,451,550 Class C LP Units outstanding, all of which were held by CTC. The Class C LP
Units are designed to provide CTC with an interest in the Partnership that entitles holders to a fixed cumulative monthly
payment, during the fixed rate period for each series of Class C LP Units (the “Current Fixed Rate Period”). Such payments
are made in priority to distributions made to holders of Class B LP Units and units representing an interest in the GP (subject
to certain exceptions) if, as and when declared by the Board of Directors of the GP and are payable monthly at an annual
distribution rate for each series as set out in the table below. In addition, the Class C LP Units are entitled to receive Special
Voting Units, in certain limited circumstances. Refer to section 7.0 for further details.
On expiry of the Current Fixed Rate Period applicable to each series of Class C LP Units, and each five-year period
thereafter, each such series of Class C LP Units is redeemable at par (together with all accrued and unpaid payments
thereon) at the option of the Partnership or the holder, upon giving at least 120 days’ prior notice. The Partnership also has
the ability to settle any of the Class C LP Units at any time at a price equal to the greater of par and a price to provide a yield
equal to the then equivalent Government of Canada bond yield plus a spread, so long as such redemption is in connection
with a sale of properties.
During the five-year period beginning immediately following the completion of the initial fixed rate period, and each five-year
period thereafter, if not redeemed, the fixed payment rate for Class C LP Units will be reset, and the holders of Class C LP
Units will be entitled, subject to certain conditions, to elect either a fixed rate or variable rate option.
Such redemptions of Class C LP Units (other than upon a change of control of CT REIT) can be settled at the option of the
Partnership, in cash or Class B LP Units of equal value.
CT REIT 2023 ANNUAL REPORT 27
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following table presents the details of the Class C LP Units:
$
$
$
Series of Class C LP Units
Series 3
Series 4
Series 5
Series 6
Series 7
Series 8
Series 9
Series 16
Series 17
Series 18
Series 19
Total / weighted average
Current
Non-current
Total
6.8 Debentures
Series
B, 3.53%, June 9, 2025
D, 3.29%, June 1, 2026
E, 3.47%, June 16, 2027
F, 3.87%, December 7, 2027
G, 2.37%, January 6, 2031
H, 3.03%, February 5, 2029
I, 5.83%, June 14, 2028
Total
Subscription
200,000
200,000
200,000
200,000
200,000
200,000
200,000
Annual
distribution rate
during Current
price Fixed Rate Period
2.37 %
4.50 %
4.50 %
5.00 %
5.00 %
5.00 %
5.00 %
2.37 %
2.37 %
2.37 %
2.37 %
4.41 %
4,900
16,550
18,500
11,600
1,451,550
Expiry of Current Fixed Rate % of Total Class C
LP Units
13.78 %
13.78 %
13.78 %
13.78 %
13.78 %
13.78 %
13.78 %
1.14 %
1.27 %
0.34 %
0.79 %
100.0 %
Period
May 31, 2025 (1.4 years)
May 31, 2024 (0.4 years)
May 31, 2028 (4.4 years)
May 31, 2031 (7.4 years)
May 31, 2034 (10.4 years)
May 31, 2035 (11.4 years)
May 31, 2038 (14.4 years)
May 31, 2025 (1.4 years)
May 31, 2025 (1.4 years)
May 31, 2025 (1.4 years)
May 31, 2025 (1.4 years)
6.9 years
200,000
1,251,550
1,451,550
December 31, 2023
December 31, 2022
Face value
Carrying
amount
Face value
Carrying
amount
$
200,000 $
199,752
$
200,000 $
199,581
200,000
175,000
200,000
150,000
250,000
250,000
199,672
174,602
199,479
149,320
248,912
248,576
200,000
175,000
200,000
150,000
250,000
—
199,537
174,487
199,346
149,223
248,731
—
$
1,425,000 $
1,420,313
$
1,175,000 $
1,170,905
Debentures as at December 31, 2023 had a weighted average interest rate of 3.73% (December 31, 2022 - 3.28%).
On November 17, 2023, CT REIT completed the issuance of $250,000 of Series I unsecured debentures with a 4.6-year term
and a coupon of 5.828% per annum. The net proceeds were used to repay short term indebtedness and for general business
purposes.
For the three months and year ended December 31, 2023, amortization of transaction costs of $263 (Q4 2022 - $213) and
$905 (YTD 2022 - $900) was included in net interest and other financing charges on the consolidated statement of income and
comprehensive income.
28 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
The debentures are rated “BBB” by S&P and “BBB” by Morningstar DBRS. The debentures are direct senior unsecured
obligations of CT REIT. Refer to section 6.3 for further details.
6.9 Mortgages Payable
Mortgages payable include the following:
(in thousands of Canadian dollars)
As at
Current
Non-current
Total
December 31, 2023
Carrying
amount
Face value
December 31, 2022
Carrying
amount
Face value
$
$
391 $
508 $
56,078 $
8,473
8,623
8,864
8,864 $
9,131 $
64,942 $
56,167
9,128
65,295
Mortgages payable as at December 31, 2023 have an interest rate of 3.24% (December 31, 2022 weighted average interest
rate – 5.49%). In Q1 2023, CT REIT repaid a mortgage which matured in March 2023 for $55,700.
6.10 Credit Facilities
Bank Credit Facility
CT REIT has a committed, unsecured $300,000 revolving credit facility with a syndicate of Canadian banks (“Bank Credit
Facility”) maturing in September 2027. The Bank Credit Facility bears interest at a rate based on a stipulated bank prime rate
or bankers’ acceptance plus a margin. A standby fee is charged on the Bank Credit Facility.
As of December 31, 2023, the REIT had no draws on the Bank Credit Facility (December 31, 2022 - $99,884, at the weighted
average interest rate of 6.16%), and $3,132 (December 31, 2022 – $4,999) of outstanding letters of credit.
CTC Credit Facility
CT REIT has an uncommitted, unsecured $300,000 revolving credit facility with CTC (“CTC Credit Facility”) maturing in
December 2024. The CTC Credit Facility bears interest at a rate based on a stipulated bank prime rate or bankers’ acceptance
plus a margin.
As of December 31, 2023, the REIT had no draws on the CTC Credit Facility (December 31, 2022 – nil).
The Bank Credit Facility and the CTC Credit Facility are herein collectively referred to as the “Credit Facilities”.
CT REIT 2023 ANNUAL REPORT 29
MANAGEMENT'S DISCUSSION AND ANALYSIS
The table below summarizes the details of the Credit Facilities as at December 31, 2023:
(in thousands of Canadian dollars)
Bank Credit Facility
CTC Credit Facility
1
1Uncommitted facility subject to CTC discretion.
Maximum draw
amount Cash advances
Letters of
credit
Available to be
drawn
$
$
300,000 $
300,000
$
— $
—
$
3,132 $
296,868
—
$
—
The
following section contains forward-looking information and readers are cautioned that actual results may vary.
6.11 Capital Strategy
Management expects the REIT’s future debt will be in the form of:
• Class C LP Units (treated as debt for accounting purposes);
•
•
•
funds drawn on the Credit Facilities;
unsecured public debt; and
secured debt.
Management’s objectives are to access an optimal cost of capital with the most flexible terms, to have a maturity/redemption
schedule (for fixed term obligations) spread over a time horizon so as to manage refinancing risk and to be in a position to
finance acquisition and development opportunities when they become available. The Declaration of Trust and the Trust
Indenture limit the REIT’s overall indebtedness ratio to 60% of total aggregate assets, excluding convertible debentures, and
65% including convertible debentures.
As at December 31, 2023, CT REIT’s indebtedness ratio was 41.4%. Refer to section 6.6 of this MD&A for the definition and
calculation of CT REIT’s indebtedness ratio.
As at December 31, 2023, CT REIT was in compliance with the financial covenants contained in the Declaration of Trust, the
Trust Indenture and the Credit Facilities.
For the year ended December 31, 2023, CT REIT’s interest coverage ratio was 3.69 times. Refer to section 6.5 of this MD&A
for the definition and calculation of CT REIT’s interest coverage ratio.
Assuming a future economic environment that is stable, management does not foresee any material impediments to
refinancing future debt maturities.
30 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following section contains forward-looking information and readers are cautioned that actual results may vary.
6.12 Commitments and Contingencies
As at December 31, 2023, CT REIT had obligations of $171,513 (December 31, 2022 - $245,547) in future payments for the
completion of developments, as described in section 4.6 of this MD&A. Included in the commitment is $163,042 due to CTC.
CT REIT believes it has sufficient liquidity to fund these future commitments as a result of (i) its conservative use of leverage
on the balance sheet; (ii) liquidity on hand; (iii) its Credit Facilities; (iv) an investment grade credit rating; (v) significant
unencumbered assets; and (vi) sufficient operating cash flow retained in the business.
6.13 Base Shelf Prospectus
On May 25, 2023, CT REIT renewed its short form base shelf prospectus (the “Base Shelf Prospectus”) under which it may
issue debt and/or equity (including the sale of Units by CTC) over the 25-month period ending June 25, 2025.
6.14 Normal Course Issuer Bid
On November 25, 2022, CT REIT received approval from the TSX to purchase up to 3,300,000 Units during the 12-month
period commencing November 29, 2022, and ending November 28, 2023 by way of a normal course issuer bid (“NCIB”).
During the year ended December 31, 2023, CT REIT acquired and cancelled 452,141 Units at a weighted average purchase
price of $13.99 per Unit, for a total cost of $6,332.
On November 27, 2023, a renewal of the NCIB (“2023-2024 NCIB”) was approved by the TSX to purchase up to 3,500,000
Units during the 12-month period commencing November 29, 2023, and ending November 28, 2024.
On November 27, 2023, the TSX approved an automatic purchase plan (“APP”) in connection with the 2023-2024 NCIB which
allows the REIT’s designated broker to periodically purchase Units during the REIT’s blackout periods, subject to pre-defined
parameters in accordance with the rules of the TSX and applicable securities laws. As of December 31, 2023, the maximum
obligation to repurchase Units under the APP of $12,300 was recognized in other liabilities.
6.15 At-the-Market Program
On May 25, 2023, CT REIT established an at-the-market program (the “ATM Program”) that allows the REIT to issue up to
$100,000 of Units from treasury to the public from time to time, at the REIT's discretion.
During the three months and year ended December 31, 2023, no Units were issued under the ATM Program.
CT REIT 2023 ANNUAL REPORT 31
MANAGEMENT'S DISCUSSION AND ANALYSIS
7.0 EQUITY
7.1 Authorized Capital and Outstanding Units
CT REIT is authorized to issue an unlimited number of Units. As at December 31, 2023, CT REIT had a total of 108,321,650
Units outstanding, 33,989,508 of which were held by CTC, and 127,193,833 Class B LP Units outstanding (together with a
corresponding number of Special Voting Units, as hereinafter defined), all of which were held by CTC.
Class B LP Units are economically equivalent to Units, are accompanied by a special voting unit (“Special Voting Unit”) and
are exchangeable at the option of the holder for Units (subject to certain conditions). Holders of the Class B LP Units are
entitled to receive distributions when declared by the Partnership equal to the per unit amount of distributions payable on the
Units. However, Class B LP Units have limited voting rights over the Partnership.
The following tables summarize the total number of units issued:
Total outstanding at beginning of year
Units issued under Distribution Reinvestment Plan
Units repurchased and cancelled
Total outstanding at end of period
Total outstanding at beginning of year
Units issued under Distribution Reinvestment Plan
Total outstanding at end of year
Units
107,501,944
1,271,847
As at December 31, 2023
Class B LP
Units
127,193,833
Total
234,695,777
—
1,271,847
(452,141)
108,321,650
—
127,193,833
(452,141)
235,515,483
As at December 31, 2022
Units Class B LP Units
Total
106,304,288
126,880,857
233,185,145
1,197,656
312,976
1,510,632
107,501,944
127,193,833
234,695,777
Each Unit is transferable and represents an equal, undivided beneficial interest in the REIT and in any distributions from the
REIT. Each Unit entitles the holder to one vote at all meetings of Voting Unitholders.
Special Voting Units are only issued in tandem with Class B LP Units or in limited circumstances to holders of the Class C LP
Units and are not transferable separately from the Class B LP Units or Class C LP Units to which they relate. Each Special
Voting Unit entitles the holder thereof to one vote at all meetings of Voting Unitholders or with respect to any written resolution
of Voting Unitholders. Except for the right to attend meetings and vote on resolutions, Special Voting Units do not confer upon
the holders thereof any other rights.
32 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
Net income attributable to unitholders and weighted average units outstanding used in determining basic and diluted net
income per unit are calculated as follows:
(in thousands of Canadian dollars, except unit amounts)
For the Year ended December 31, 2023
Units
Class B LP
Units
Total
Net income attributable to unitholders - basic
$
105,287 $
124,147 $
229,434
Income
effect of settling Class C LP Units with Class B LP Units
Net income attributable to unitholders - diluted
Weighted average units outstanding - basic
Dilutive effect of other unit plans
Dilutive effect of settling Class C LP Units with Class B LP Units
Weighted average number of units outstanding - diluted
63,962
$
293,396
107,965,763
127,193,833
235,159,596
326,050
101,854,123
337,339,769
For the Year ended December 31, 2022
(in thousands of Canadian dollars, except unit amounts)
Units Class B LP Units
Total
Net income attributable to unitholders - basic
$
148,264 $
176,349 $
324,613
Income effect of settling Class C LP Units with Class B LP Units
Net income attributable to unitholders - diluted
Weighted average units outstanding - basic
Dilutive effect of other unit plans
Dilutive effect of settling Class C LP Units with Class B LP Units
Weighted average number of units outstanding - diluted
7.2 Equity
(in thousands of Canadian dollars)
As at
Equity - beginning of period, as previously reported
Net income and comprehensive income for the period
Issuance of Class B LP Units, net of issue costs
Distributions to non-controlling interests
Distributions to Unitholders
Issuance of Units under Distribution Reinvestment Plan and other
Units repurchased and cancelled
Automatic purchase plan
Equity - end of the period
63,962
$
388,575
106,893,856
127,123,521
234,017,377
288,433
93,706,035
328,011,845
December 31, 2023
December 31, 2022
$
3,827,173 $
3,678,149
229,434
—
(112,637)
(95,635)
18,066
(6,332)
(12,300)
324,613
5,617
(108,827)
(91,537)
19,158
—
—
$
3,847,769 $
3,827,173
CT REIT 2023 ANNUAL REPORT 33
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following section contains forward-looking information and readers are cautioned that actual results may vary.
7.3 Distributions
CT REIT’s primary business goal is to accumulate a portfolio of high-quality real estate assets and deliver the benefits of such
real estate ownership to Unitholders. The primary benefit to Unitholders is expected to be reliable, durable and growing
distributions over time.
In determining the amount of the monthly distributions paid to Unitholders, the Board applies discretionary judgment to
forward-looking cash flow information, such as forecasts and budgets, in addition to many other factors including provisions in
the Declaration of Trust, the macro-economic and industry-specific environment, debt maturities, covenants and taxable
income.
The Board regularly reviews CT REIT’s rate of distributions to ensure an appropriate level of distributions. The Board has
discretion over the determination of monthly and annual distributions.
On December 15, 2023, a distribution of $0.07485 per unit payable on January 15, 2024 was declared to holders of Units and
Class B LP Units of record on December 29, 2023.
On January 15, 2024, a distribution of $0.07485 per unit payable on February 15, 2024 was declared to holders of Units and
Class B LP Units of record on January 31, 2024.
One of CT REIT’s objectives is to grow monthly distributions. The distribution payments and increases since January 1, 2014
are as follows:
Year
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
Effective date 1
Monthly distribution
per unit
% increase
July
July
July
$0.075
$0.072
$0.070
3.5 %
3.4 %
4.5 %
Annualized
distribution
per unit
$0.898
$0.868
$0.839
Annualized
distribution
increase
per unit
$0.030
$0.029
$0.036
January / September
$0.066 /
$0.067
4.0 % / 2.0 %
$0.787 / $0.803
$0.030 / $0.016
January
January
January
January
January
January
$0.063
$0.061
$0.058
$0.057
$0.055
$0.054
4.0 %
4.0 %
2.9 %
2.6 %
2.0 %
—
$0.757
$0.728
$0.700
$0.680
$0.663
$0.650
$0.029
$0.028
$0.020
$0.017
$0.013
—
1 Month upon which the payment of the monthly distribution increase became effective.
34 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
(in thousands of Canadian dollars, except per unit amounts)
Three Months Ended
Year Ended
For the periods ended December 31,
Distributions before distribution reinvestment - paid
Distribution reinvestment
Distributions net of distribution reinvestment - paid
Distributions per unit - paid
2023
2022
2023
2022
52,849 $
50,873 $
207,616 $
199,699
4,699
4,745
18,509
19,158
48,150 $
46,128 $
189,107 $
180,541
0.225 $
0.217 $
0.883 $
0.854
$
$
$
Distributions for the three months and year ended December 31, 2023 are higher than the same period in the prior year due to
the increase in distributions which became effective with the monthly distributions paid in July 2022 and July 2023,
respectively.
Net income prepared in accordance with IFRS recognizes certain revenues and expenses at time intervals that do not match
the receipt or payment of cash. Therefore, in applying judgment, consideration is given to AFFO (a non-GAAP measure of
recurring economic earnings used to assess distribution capacity, refer to section 10.0) and other factors when determining
distributions to unitholders.
CT REIT’s distributions for the three months and year ended December 31, 2023 are less than the REIT’s cash generated
from operating activities, cash generated from operating activities reduced by net interest and other financing charges, and
AFFO, a non-GAAP financial measure, which is an indicator of CT REIT’s distribution capacity.
(in thousands of Canadian dollars, except per unit amounts)
Three Months Ended
Year Ended
For the periods ended December 31,
AFFO 1
Distributions before distribution reinvestment - paid
Excess of AFFO over distributions paid (A) 1
Weighted
average
units outstanding - diluted (non-GAAP) (B)
2
Excess
of AFFO over distributions
paid per unit (A)/(B)
2
2023
2022
2023
2022
71,474 $
68,515 $
283,389 $
268,783
52,849 $
50,873
207,616
18,625 $
17,642
$
75,773
$
199,699
69,084
235,723,101
234,836,723
235,485,646
234,305,809
0.079
$
0.075
$
0.322
$
0.295
$
$
$
1 Non-GAAP financial measure. Refer to section 10.1 for further information.
2 Non-GAAP ratio. Refer to section 10.2 for further information.
7.4 Book Value Per Unit
Book value per unit represents total equity from the consolidated balance sheets divided by the sum of the period end Units
and Class B LP Units outstanding. It is an indication of the residual book value available to unitholders. As well, book value per
unit is compared to the REIT’s Unit trading price in order to measure a premium or discount.
(in thousands of Canadian dollars, except for per unit amounts)
As at
Total equity (A)
Period-end Units and Class B LP Units outstanding (B)
Book
value
per unit (A)/(B)
December 31, 2023
December 31, 2022
$
$
3,847,769 $
3,827,173
235,515,483
234,695,777
16.34
$
16.31
CT REIT’s book value per unit as at December 31, 2023 increased from the book value per unit as at December 31, 2022
primarily due to net income exceeding distributions.
CT REIT 2023 ANNUAL REPORT 35
MANAGEMENT'S DISCUSSION AND ANALYSIS
8.0 RELATED PARTY TRANSACTIONS
On December 31, 2023, CT REIT’s controlling unitholder, CTC, held a 68.4% effective interest in the REIT, through the
ownership of 33,989,508 Units and all of the issued and outstanding Class B LP Units. CTC also owns all of the Class C LP
Units. Refer to section 6.7 of this MD&A for additional information on Class C LP Units.
In addition to its ownership interest, CTC is CT REIT’s most significant tenant representing approximately 91.3% of the total
annualized base minimum rent earned by CT REIT and 92.1% of total GLA as at December 31, 2023.
In the normal course of its operations, CT REIT enters into various transactions with related parties that have been valued at
amounts agreed to between the parties and recognized in the consolidated financial statements. Investment property
transactions with CTC amounted to $117,738 (2022 - $203,071) for the year ended December 31, 2023. Refer to Note 4 to the
consolidated financial statements for additional information.
CT REIT entered into the CTC Credit Facility in December 2019. Refer to section 6.10 of this MD&A for additional information.
CT REIT’s policy is to conduct all transactions and settle all balances, with related parties, on market terms and conditions.
Pursuant to the Declaration of Trust, related party transactions are generally subject to the approval of the independent
trustees of the Board.
CT REIT and CTC are parties to a number of commercial agreements which govern the relationships among such parties,
including the Services Agreement and the Property Management Agreement described below.
Services Agreement
Under the Services Agreement, as amended and restated as of August 8, 2023, CTC provides the REIT with certain
administrative, information technology, internal audit and other support services as may be reasonably required from time to
time (the “Services”). CTC provides these Services to the REIT on a cost recovery basis pursuant to which CT REIT
reimburses CTC for all costs and expenses incurred by CTC in connection with providing the Services, plus applicable taxes.
The Services Agreement is automatically renewable for one year terms, unless otherwise terminated in accordance with its
terms. The Services Agreement was automatically renewed for 2024 and CTC will continue to provide such Services on a
cost recovery basis.
Property Management Agreement
Under the Property Management Agreement, as amended and restated as of August 8, 2023, CTC provides the REIT with
certain property management services (the ‘‘Property Management Services’’). CTC provides these Property Management
Services to the REIT on a cost recovery basis pursuant to which the REIT reimburses CTC for all costs and expenses incurred
by CTC in connection with providing the Property Management Services, plus applicable taxes. The Property Management
Agreement is automatically renewable for one year terms, unless otherwise terminated in accordance with its terms. The
Property Management Agreement was automatically renewed for 2024 and CTC will continue to provide such Property
Management Services on a cost recovery basis.
36 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
CTC Credit Facility
CT REIT has a Credit Facility with CTC that was entered into on December 18, 2019 and which is automatically renewed for
one year terms, unless otherwise terminated in accordance with its terms. The CTC Credit Facility was automatically renewed
in December 2023 and expires on December 31, 2024. The CTC Credit Facility bears interest at a rate based on a stipulated
bank prime rate or bankers’ acceptance, plus a margin.
Refer to CT REIT’s 2023 AIF for additional information on related party agreements and arrangements with CTC.
The following table summarizes CT REIT’s related party transactions for the period ended December 31, 2023, excluding
acquisition, intensification and development activities which are contained in section 4.0:
(in thousands of Canadian dollars)
For the periods ended December 31,
Rental revenue
Property Management and Services Agreement expense
Distributions on Units
Distributions on Class B LP Units 1
Interest expense on Class C LP Units
Interest expense on the CTC Credit Facility
1 Includes distributions deferred at the election of the holders of the Class B LP Units.
The net balance due to CTC is comprised of the following:
(in thousands of Canadian dollars)
As at
Tenant and other receivables
Class C LP Units
Amounts payable on Class C LP Units
Loans receivable in respect of payments on Class C LP Units
Other liabilities
Distributions payable on Units and Class B LP Units 1
Loans receivable in respect of distributions on Class B LP Units
Year Ended
2023
2022
494,321 $
475,851
1,575 $
30,100 $
1,550
29,092
112,637 $
108,827
63,962 $
63,962
1,661 $
958
$
$
$
$
$
$
December 31, 2023
December 31, 2022
$
(2,613) $
1,451,550
63,962
(58,631)
50,514
37,363
(25,298)
(1,331)
1,451,550
63,962
(58,631)
48,713
36,066
(24,409)
Net balance due to CTC
$
1,516,847 $
1,515,920
1 Includes distributions deferred at the election of the holders of the Class B LP Units.
CT REIT 2023 ANNUAL REPORT 37
MANAGEMENT'S DISCUSSION AND ANALYSIS
9.0 ACCOUNTING POLICIES AND ESTIMATES
9.1 Significant Areas of Estimation
The preparation of the consolidated financial statements requires management to apply judgments, and to make estimates
and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Estimates are based upon
historical experience and on various other assumptions that are reasonable under the circumstances. The result of ongoing
evaluation of these estimates forms the basis for applying judgment with regards to the carrying values of assets and liabilities
and the reported amounts of revenues and expenses. Actual results may differ from estimates. CT REIT’s critical judgments
and estimates in applying material accounting policies are described in Note 2 of the consolidated financial statements, the
most significant of which is the fair value of investment properties.
Fair Value of Investment Properties
To determine fair value, CT REIT uses the discounted cash flow method. Fair value is estimated by capitalizing the cash flows
that the property can reasonably be expected to produce over its remaining economic life. Properties Under Development are
initially recorded at cost and are adjusted to fair value at each balance sheet date with the fair value adjustment recognized in
earnings.
9.2 Standards, Amendments and Interpretations Issued and Adopted
The following amendment was adopted for the fiscal year ended December 31, 2023, and accordingly, has been applied in
preparing these consolidated financial statements.
Improving accounting estimates (Amendments to IAS 8)
In February 2021, the International Accounting Standards Board (“IASB”) issued narrow-scope amendments to IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors.
Amendments to IAS 8 clarify how companies should distinguish changes in accounting policies from changes in accounting
estimates. That distinction is important because changes in accounting estimates are applied prospectively only to future
transactions and other future events, whereas changes in accounting policies are generally applied retrospectively to past
transactions and other past events.
The implementation of these amendments did not have a significant impact on CT REIT.
9.3 Standards, Amendments and Interpretations Issued but Not Yet Adopted
The following new standards, amendments and interpretations have been issued but are not effective for the fiscal year ended
December 31, 2023, and, accordingly, have not been applied in preparing these consolidated financial statements. CT REIT is
assessing the potential impact of these amendments.
In January 2020, the IASB issued an amendment to IAS 1, Presentation of Financial Statements to clarify its requirements for
the presentation of liabilities in the statement of financial position. The amendment clarified that the classification of liabilities
as current or non-current is based on rights that are in existence at the end of the reporting period and that classification is
unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability. It also introduced a
38 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
definition of ‘settlement’ to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments,
other assets or services. On October 31, 2022, the IASB issued Non-Current Liabilities with Covenants (Amendments to IAS
1). These amendments specify that covenants to be complied with after the reporting date do not affect the classification of
debt as current or non-current at the reporting date.
The amendments are effective for annual reporting periods beginning on or after January 1, 2024. Earlier application is
permitted. The implementation of these amendments is not expected to have a significant impact on CT REIT.
CT REIT 2023 ANNUAL REPORT 39
MANAGEMENT'S DISCUSSION AND ANALYSIS
10.0 SPECIFIED FINANCIAL MEASURES
CT REIT uses specified financial measures as defined by the Canadian Securities Administrators (“CSA”)’s National
Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure issued on August 25, 2021. CT REIT believes these
specified financial measures provide useful information to both management and investors in measuring the financial
performance of CT REIT and its ability to meet its principal objective of creating unitholder value over the long term by
generating reliable, durable and growing monthly cash distributions on a tax-efficient basis.
These specified financial measures include non-GAAP financial measures and non-GAAP ratios which do not have a
standardized meaning prescribed by GAAP and therefore they may not be comparable to similarly titled measures and ratios
presented by other publicly traded entities and should not be construed as an alternative to other financial measures
determined in accordance with GAAP.
10.1 Non-GAAP Financial Measures
Non-GAAP financial measures are not standardized financial measures under the IFRS financial reporting framework used to
prepare the REIT’s financial statements to which the measure relates. As such, non-GAAP financial measures may not be
comparable to similar financial measures disclosed by other public entities.
Certain non-GAAP financial measures for the real estate industry have been defined by the Real Property Association of
Canada (“REALPAC”) under its publications, “REALPAC Funds From Operations & Adjusted Funds From Operations for
IFRS” (“REALPAC FFO & AFFO”) and “REALPAC Adjusted Cashflow from Operations for IFRS” (“REALPAC ACFO”). The
purpose of the publications is to provide guidance on the definition of certain non-GAAP financial measures to promote
consistent disclosure amongst reporting issuers.
Management has identified the following non-GAAP financial measures in this MD&A:
• Net Operating Income (“NOI”)
•
•
•
•
•
•
Same store NOI
Same property NOI
Intensifications NOI
Acquisitions, developments, dispositions NOI
Funds from Operations (“FFO”)
Adjusted Funds from Operations (“AFFO”)
• Capital expenditure reserve
•
•
•
Adjusted Cash Flow from Operations (“ACFO”)
Earnings Before Interest, Taxes and Fair Value (“EBITFV”)
Excess of AFFO over distributions paid
• Non-operating adjustments to working capital
40 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
10.1 (a) Net Operating Income
NOI is a non-GAAP financial measure defined as property revenue less property expense, adjusted for straight-line rent. The
most directly comparable primary financial statement measure is property revenue. Management believes that NOI is a useful
key indicator of performance as it represents a measure of property operations over which management has control. NOI is
also a key input in determining the fair value of the portfolio of Properties. NOI should not be considered as an alternative to
property revenue or net income and comprehensive income, both of which are determined in accordance with IFRS.
(in thousands of Canadian dollars)
Three Months Ended
Year Ended
For the periods ended December 31,
2023
2022 Change ¹
2023
2022 Change ¹
Property revenue
Less:
Property expense
$
139,968 $
135,175
3.5 % $
552,772 $
532,795
3.7 %
(28,842)
(27,833)
3.6 %
(115,523)
(111,133)
4.0 %
Property straight-line rent revenue
386
(579)
NM
1,707
(1,844)
Net operating income
¹ NM - not meaningful.
10.1 (b) Same Store NOI
$
111,512 $
106,763
4.4 % $
438,956 $
419,818
NM
4.6 %
Same store NOI is a non-GAAP financial measure which reports the period-over-period performance of the same asset base
having consistent GLA in both periods. CT REIT management believes same store NOI is a useful measure to gauge the
change in asset productivity and asset value. The most directly comparable primary financial statement measure is property
revenue. Same store NOI should not be considered as an alternative to property revenue or net income and comprehensive
income, both of which are determined in accordance with IFRS.
10.1 (c) Same Property NOI
Same property NOI is a non-GAAP financial measure that is consistent with the definition of same store NOI above, except
that same property includes the NOI impact of intensifications. Management believes same property NOI is a useful measure
to gauge the change in asset productivity and asset value, as well as measure the additional return earned by incremental
capital investments in existing assets. The most directly comparable primary financial statement measure is property revenue.
Same property NOI should not be considered as an alternative to property revenue or net income and comprehensive income,
both of which are determined in accordance with IFRS.
10.1 (d) Intensifications NOI
Intensifications NOI is a non-GAAP financial measure that is consistent with the definition of NOI above with respect to same
property having increased GLA relative to the comparative period. CT REIT management believes intensifications NOI is a
useful measure to understand the impact of increased GLA on asset productivity and asset value for same property. The most
directly comparable primary financial statement measure is property revenue. Intensifications NOI should not be considered as
an alternative to property revenue or net income and comprehensive income, both of which are determined in accordance with
IFRS.
CT REIT 2023 ANNUAL REPORT 41
MANAGEMENT'S DISCUSSION AND ANALYSIS
10.1 (e) Acquisitions, Developments and Dispositions NOI
Acquisitions, developments and dispositions NOI is a non-GAAP financial measure that is consistent with the definition of NOI
above with respect to new property or dispositions of property not included in same property NOI. CT REIT management
believes acquisitions, developments, and dispositions NOI is a useful measure to gauge the change in asset productivity and
asset value. The most directly comparable primary financial statement measure is property revenue. Acquisitions,
developments, and dispositions NOI should not be considered as an alternative to property revenue or net income and
comprehensive income, both of which are determined in accordance with IFRS.
The following table summarizes the same store and same property components of NOI:
(in thousands of Canadian dollars)
For the periods ended December 31,
Same store
Intensifications
2023
2022
Same property
Acquisitions and developments
2023
2022
Net operating income
Add:
Property expense
Property straight-line rent revenue
Property Revenue
¹ NM - not meaningful.
Three Months Ended
2023
2022
$ 107,552 $ 105,210
Change ¹
Year Ended
2022
2023
2.2 % $ 421,694 $ 411,478
1,175
967
—
665
NM
45.4 %
2,294
8,994
—
3,521
$ 109,694 $ 105,875
3.6 % $ 432,982 $ 414,999
1,445
373
—
888
NM
(58.0)%
4,947
1,027
966
3,853
$ 111,512 $ 106,763
4.4 % $ 438,956 $ 419,818
28,842
27,833
(386)
579
$ 139,968 $ 135,175
3.6 %
NM
115,523
111,133
(1,707)
3.5 % $ 552,772 $ 532,795
1,844
Change ¹
2.5 %
NM
NM
4.3 %
NM
(73.3)%
4.6 %
4.0 %
NM
3.7 %
10.1 (f) Funds From Operations and Adjusted Funds From Operations
The following table reconciles GAAP net income and comprehensive income to FFO and further reconciles FFO to AFFO:
(in thousands of Canadian dollars)
For the periods ended December 31,
Three Months Ended
2023
2022 Change ¹
Year Ended
2023
2022 Change ¹
Net Income and comprehensive income
$
38,239 $
74,749
(48.8)% $
229,434
$ 324,613
(29.3)%
Fair value adjustment on investment property
39,334
860
NM
78,636
(27,845)
GP income tax expense
Lease principal payments on right-of-use assets
Fair value adjustment of unit-based compensation
Internal leasing expense
Funds from operations
Property straight-line rent revenue
Direct leasing costs 2, 3
Capital expenditure reserve 2
NM
NM
(115)
(564)
51.1 %
(866)
(27.8)%
(628)
(171)
523
407
(495)
26.9 %
(145)
17.9 %
276
325
89.5 %
25.2 %
31
(852)
(625)
1,290
981
31.5 %
$
77,704 $
75,570
2.8 % $ 307,914 $ 296,204
4.0 %
386
(290)
(579)
NM
1,707
(233)
24.5 %
(1,190)
(1,844)
(547)
NM
NM
(6,326)
(6,243)
1.3 %
(25,042)
(25,030)
— %
Adjusted funds from operations
$
71,474 $
68,515
4.3 % $ 283,389 $ 268,783
5.4 %
¹ NM - not meaningful.
2 Comparatives have been restated to conform with current year’s presentation.
3 Excludes internal and external leasing costs related to development projects.
42 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
Funds From Operations
FFO is a non-GAAP financial measure of operating performance used by the real estate industry, particularly by those publicly
traded entities that own and operate income-producing properties. The most directly comparable primary financial statement
measure is net income and comprehensive income. FFO should not be considered as an alternative to net income or cash
flows provided by operating activities determined in accordance with IFRS. CT REIT calculates its FFO in accordance with
REALPAC FFO & AFFO. The use of FFO, together with the required IFRS presentations, has been included for the purpose of
improving the understanding of the operating results of CT REIT.
Management believes that FFO is a useful measure of operating performance that, when compared period-over-period,
reflects the impact on operations of trends in occupancy levels, rental rates, operating costs and property taxes, acquisition
activities and interest costs, and provides a perspective of the financial performance that is not immediately apparent from net
income determined in accordance with IFRS.
FFO adds back to net income items that do not arise from operating activities, such as fair value adjustments. FFO, however,
still includes non-cash revenues related to accounting for straight-line rent and makes no deduction for the recurring capital
expenditures necessary to sustain the existing earnings stream.
Adjusted Funds From Operations
AFFO is a non-GAAP financial measure of recurring economic earnings used in the real estate industry to assess an entity’s
distribution capacity. The most directly comparable primary financial statement measure is net income and comprehensive
income. AFFO should not be considered as an alternative to net income or cash flows provided by operating activities
determined in accordance with IFRS. CT REIT calculates its AFFO in accordance with REALPAC FFO & AFFO.
CT REIT calculates AFFO by adjusting FFO for non-cash income and expense items such as amortization of straight-line
rents. AFFO is also adjusted for a reserve for maintaining the productive capacity required for sustaining property
infrastructure and revenue from real estate properties and direct leasing costs. As property capital expenditures do not occur
evenly during the fiscal year or from year to year, the capital expenditure reserve in the AFFO calculation, which is used as an
input in assessing the REIT’s distribution payout ratio, is intended to reflect an average annual spending level. The reserve is
primarily based on average expenditures as determined by building condition reports prepared by independent consultants.
Management believes that AFFO is a useful measure of operating performance similar to FFO as described above, adjusted
for the impact of non-cash income and expense items.
CT REIT 2023 ANNUAL REPORT 43
MANAGEMENT'S DISCUSSION AND ANALYSIS
10.1 (g) Capital Expenditure Reserve
The following table compares and reconciles recoverable capital expenditures since 2013 to the capital expenditure reserve
used in the calculation of AFFO during that period:
(in thousands of Canadian dollars)
For the periods indicated
October 23, 2013 to December 31, 2017
Year ended December 31, 2018
Year ended December 31, 2019
Year ended December 31, 2020
Year ended December 31, 2021
2022
Q1
Q2
Q3
Q4
Year ended December 31, 2022
2023
Q1
Q2
Q3
Q4
Year
ended December 31, 2023
Total
1 Comparatives have been restated to conform with current year’s presentation.
Capital
expenditure
reserve 1
Recoverable
capital
expenditures
74,266 $
66,418 $
22,517 $
17,699 $
23,431 $
20,549 $
24,254 $
18,091 $
Variance
7,848
4,818
2,882
6,163
24,387 $
33,994 $
(9,607)
6,213 $
1,966 $
6,227
6,347
6,243
2,502
7,464
14,903
25,030 $
26,835 $
6,327 $
824 $
6,181
6,208
6,326
4,852
10,818
17,782
25,042
$
34,276
$
218,927
$
217,862
$
4,247
3,725
(1,117)
(8,660)
(1,805)
5,503
1,329
(4,610)
(11,456)
(9,234)
1,065
$
$
$
$
$
$
$
$
$
$
The capital expenditure reserve is a non-GAAP financial measure and management believes the reserve is a useful measure
to understand the normalized capital expenditures required to maintain property infrastructure. Recoverable capital
expenditures are the most directly comparable measure disclosed in the REIT’s primary financial statements. The capital
expenditure reserve should not be considered as an alternative to recoverable capital expenditures, which is determined in
accordance with IFRS.
The capital expenditure reserve exceeded recoverable capital expenditures by $1,065 during the period from October 23, 2013
through December 31, 2023. The capital expenditure reserve per square foot has increased since 2013, which reflects
changes in asset mix (primarily due to an increase in multi-tenanted retail investment properties) and inflation in expected
costs. Management expects there will be periods in the future where recoverable capital expenditures will exceed the capital
expenditure reserve. The current period reserve is based upon unit costs that are anticipated to be realized in work to be
completed in the current period.
The capital expenditure reserve varies from the capital expenditures incurred due to the seasonal nature of the expenditures.
As such, CT REIT views the capital expenditure reserve as a meaningful measure. Refer to section 4.11 for additional
information.
44 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
10.1 (h) Adjusted Cash Flow from Operations
ACFO is a non-GAAP financial measure developed by REALPAC for use by the real estate industry as a sustainable
economic cash flow metric. ACFO should not be considered as an alternative to cash flows provided by operating activities
determined in accordance with IFRS. CT REIT calculates its ACFO in accordance with REALPAC ACFO. Management
believes that the use of ACFO, combined with the required IFRS presentations, improves the understanding of the operating
cash flow of CT REIT.
CT REIT calculates ACFO from cash flow generated from operating activities by adjusting for non-operating adjustments to
changes in working capital and other, net interest and other financing charges, capital expenditure reserve, and lease
payments. The most directly comparable GAAP measure in the primary financial statements is Cash Generated from
Operating Activities. A reconciliation from the IFRS term “Cash Generated from Operating Activities” (refer to the Consolidated
Statements of Cash Flows for the year ended December 31, 2023 and December 31, 2022) to ACFO is as follows:
(in thousands of Canadian dollars)
For the periods ended December 31,
Three Months Ended
Year Ended
2023
2022 Change ¹
2023
2022 Change ¹
Cash generated from operating activities
$ 118,316 $ 123,937
(4.5)% $ 425,055 $ 399,273
6.5 %
Non-operating adjustments to changes in working capital and other
(9,449)
(308)
NM
(5,296)
5,193
NM
Net interest and other financing charges
(29,425)
(27,703)
6.2 %
(113,942)
(110,416)
3.2 %
External leasing expenses not related to development
(94)
(77)
22.1 %
(571)
(77)
Capital expenditure reserve 2
(6,326)
(6,243)
1.3 %
(25,042)
(25,030)
NM
— %
Lease principal payments on right-of-use assets
(171)
(145)
17.9 %
(852)
(564)
51.1 %
Adjusted cashflow from operations 2
¹ NM - not meaningful.
² Comparatives have been restated to conform with current year’s presentation.
$ 72,851 $ 89,461
(18.6)% $ 279,352 $ 268,379
4.1 %
10.1 (i) Earnings Before Interest and Other Financing Costs, Taxes and Fair Value Adjustments
EBITFV is a non-GAAP financial measure of a REIT’s operating cash flow and it is used in addition to IFRS net income
because it excludes major non-cash items (including fair value adjustments), interest expense and other financing costs,
income tax expense, losses or gains on disposition of property, and other non-recurring items that may occur under IFRS that
management considers non-operating in nature. The most directly comparable GAAP measure in the primary financial
statements is net income and comprehensive income. EBITFV should not be considered as an alternative to net income and
comprehensive income or cash flows provided by operating activities determined in accordance with IFRS.
EBITFV is used as an input in some of CT REIT’s debt metrics, providing information with respect to certain financial ratios
that CT REIT uses in measuring its debt profile and assessing its ability to satisfy its obligations, including servicing its debt.
CT REIT 2023 ANNUAL REPORT 45
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the three months and year ended December 31, 2023, EBITFV was calculated as follows:
(in thousands of Canadian dollars)
Three Months Ended
Year Ended
For the periods ended December 31,
2023
2022 Change ¹
2023
2022 Change ¹
Net income and comprehensive income
$
38,239 $
74,749
(48.8)% $
229,434 $
324,613
(29.3)%
Fair value adjustment on investment properties
Fair value adjustment on unit-based awards
39,334
523
860
276
Interest expense and other financing charges
29,795
27,743
89.5 %
7.4 %
NM
78,636
(27,845)
NM
(625)
(866)
(27.8)%
114,482
110,672
3.4 %
NM
(628)
(495)
26.9 %
31
(115)
$
107,263 $
103,133
4.0 % $
421,958 $
406,459
3.8 %
GP income tax expense
EBITFV
¹ NM - not meaningful.
10.1 (j) Excess of AFFO over Distributions Paid
Excess of AFFO over distributions paid is a non-GAAP financial measure. Management believes this measure is useful as it is
an indicator of CT REIT’s distribution capacity. Net income and comprehensive income is the most directly comparable
financial measure that is disclosed in the REIT’s primary financial statements. Refer to the table in 10.1 (f) reconciling net
income and comprehensive income to AFFO.
(in thousands of Canadian dollars)
For the periods ended December 31,
AFFO
Distributions before distribution reinvestment - paid
Excess of AFFO over distributions paid
Three Months
Ended
Year Ended
2023
2022
2023
2022
71,474
$
68,515
$
283,389
$
268,783
52,849
50,873
207,616
199,699
18,625
$
17,642
$
75,773
$
69,084
$
$
10.1 (k) Non-operating Adjustments to Working Capital
Non-operating adjustments to working capital is a non-GAAP financial measure used in the calculation of ACFO described
above. The most directly comparable primary financial statement measure is changes in working capital and other. This
measure should not be considered as an alternative to changes in working capital and other determined in accordance with
IFRS. CT REIT calculates its non-operating adjustments to working capital in accordance with REALPAC ACFO. Management
believes non-operating adjustments to working capital is a useful improvement to the understanding of the operating cash flow
of CT REIT, by eliminating fluctuations due to changes in accounts receivable, accounts payable and other working capital
items that are not indicative of sustainable cash available for distribution to unitholders.
(in thousands of Canadian dollars)
For the periods ended December 31,
Changes in working capital and other
Add/(deduct):
Change in tenant and other receivables
Change in other non-current liabilities
Change in other liabilities
Other
Three months ended
Year ended
2023
2022
2023
$
(11,560) $
(21,699) $
(1,305) $
(618)
1,007
(940)
2,662
9,292
866
11,722
(489)
31
48
(3,432)
(638)
2022
5,952
(256)
(346)
1,053
(1,210)
Non-operating adjustments to changes in working capital and
other
$
(9,449) $
(308) $
(5,296) $
5,193
46 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
The composition of non-operating adjustments to working capital is made up of:
(in thousands of Canadian dollars)
For the periods ended December 31,
Other non-current assets
Other current assets
Tenant and other receivables
Other liabilities
Three months ended
Year ended
$
2023
174 $
(13,347)
(2,474)
6,198
2022
(247) $
(12,104)
(3,077)
15,120
2023
101 $
252
(249)
(5,400)
2022
(382)
1,299
593
3,683
Non-operating adjustments to changes in working capital and
other
$
(9,449) $
(308) $
(5,296) $
5,193
10.2 Non-GAAP Ratios
Non-GAAP ratios are not standardized financial measures under the IFRS financial reporting framework used to prepare the
REIT’s financial statements to which the measure relates. As such, non-GAAP ratios may not be comparable to similar
financial measures disclosed by other public entities.
Management has identified the following non-GAAP ratios in this MD&A:
•
•
•
•
•
•
•
•
•
AFFO payout ratio
FFO per unit - basic
FFO per unit - diluted (non-GAAP)
AFFO per unit - basic
AFFO per unit - diluted (non-GAAP)
Excess of AFFO over distributions paid per unit
Total indebtedness to EBITFV
Interest coverage ratio
Adjusted general and administrative expense as a percent of property revenue
10.2 (a) AFFO Payout Ratio
The AFFO payout ratio is a non-GAAP ratio which measures the sustainability of the REIT’s distribution payout. Management
believes this is a useful measure to investors since this metric provides transparency on performance. Management considers
the AFFO payout ratio to be the best measure of the REIT’s distribution capacity. The AFFO payout ratio is not a standardized
financial measure under IFRS and should not be considered as an alternative to other ratios determined in accordance with
IFRS. The component of the AFFO payout ratio, which is a non-GAAP financial measure, is AFFO, and the composition of the
AFFO payout ratio is as follows:
Three Months Ended
Year Ended
For the periods ended December 31,
2023
2022
Change
2023
2022
Change
Distribution
per unit - paid (A)
1
AFFO per unit - diluted (non-GAAP)
(B)
$
$
0.225
0.303
$
$
0.217
0.292
3.5 % $
0.883
3.8 % $
1.203
$
$
0.854
1.147
3.5 %
4.9 %
AFFO payout ratio (A)/(B)
74.3 %
74.3 %
— %
73.4 %
74.5 %
(1.1)%
1 For the purposes of calculating diluted per unit amounts, diluted units include restricted and deferred units issued under various plans and excludes the effects of settling
the Class C LP Units with Class B LP Units.
CT REIT 2023 ANNUAL REPORT 47
MANAGEMENT'S DISCUSSION AND ANALYSIS
10.2 (b) FFO per unit - Basic, FFO per unit - Diluted (non-GAAP), AFFO per unit - Basic and AFFO per unit - Diluted
(non-GAAP)
FFO per unit - basic, FFO per unit - diluted (non-GAAP), AFFO per unit - basic and AFFO per unit - diluted (non-GAAP) are
non-GAAP ratios and reflect FFO and AFFO on a weighted average per unit basis. Management believes these non-GAAP
ratios are useful measures to investors since the measures indicate the impact of FFO and AFFO, respectively, in relation to
an individual per unit investment in the REIT. When calculating diluted per unit amounts, diluted units include restricted and
deferred units issued under various plans and exclude the effects of settling the Class C LP Units with Class B LP Units.
Management believes that FFO per unit ratios are useful measures of operating performance that, when compared period-
over-period, reflect the impact on operations of trends in occupancy levels, rental rates, operating costs and property taxes,
acquisition activities and interest costs, and provides a perspective of the financial performance that is not immediately
apparent from net income per unit determined in accordance with IFRS. Management believes that AFFO per unit ratios are
useful measures of operating performance similar to FFO as described above, adjusted for the impact of non-cash income and
expense items. The FFO per unit and AFFO per unit ratios are not standardized financial measures under IFRS and should
not be considered as an alternative to other ratios determined in accordance with IFRS. The component of the FFO per unit
ratios, which is a non-GAAP financial measure, is FFO, and the component of AFFO per unit ratios, which is a non-GAAP
financial measure, is AFFO.
For the periods ended December 31,
Funds from operations/unit - basic
Funds from operations/unit - diluted (non-GAAP)
For the periods ended December 31,
Adjusted funds from operations/unit - basic
Adjusted funds from operations/unit - diluted (non-
GAAP)
Three Months Ended
Year Ended
2023
2022 Change
2023
2022 Change
0.330 $
0.322
0.330 $
0.322
2.5 % $
2.5 % $
1.309 $
1.266
1.308 $
1.264
3.4 %
3.5 %
Three Months Ended
Year Ended
2023
2022 Change
2023
2022 Change
0.304 $
0.292
4.1 % $
1.205 $
1.149
4.9 %
0.303 $
0.292
3.8 % $
1.203 $
1.147
4.9 %
$
$
$
$
Management calculates the weighted average units outstanding - diluted (non-GAAP) by excluding the full conversion of the
Class C LP Units to Class B LP Units, which is not considered a likely scenario. As such, the REIT’s fully diluted per unit FFO
and AFFO amounts are calculated, excluding the effects of settling the Class C LP Units with Class B LP Units, which
management considers a more meaningful measure.
10.2 (c) Excess of AFFO over Distributions Paid per unit
Excess of AFFO over distributions paid per unit is a non-GAAP ratio and reflects excess of AFFO over distributions on a
weighted average per unit basis. Management believes this non-GAAP ratio is a useful measure to investors since it is an
indicator of CT REIT’s distribution capacity in relation to an individual per unit investment in the REIT. The excess of AFFO
over distributions paid per unit is not a standardized financial measure under IFRS and should not be considered as an
alternative to other ratios determined in accordance with IFRS. The component of the excess of AFFO over distributions paid
per unit which is a non-GAAP financial measure is excess of AFFO over distributions paid. The composition of the excess of
AFFO over distributions paid per unit is as follows:
48 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
(in thousands of Canadian dollars, except per unit amounts)
Three Months Ended
Year Ended
For the periods ended December 31,
Excess of AFFO over distributions paid (A)
Weighted average units outstanding - diluted (non-GAAP) (B)
Excess of AFFO over distributions paid per unit (A)/(B)
2023
2022
2023
18,625 $
17,642 $
75,773 $
2022
69,084
235,723,101
234,836,723
235,485,646
234,305,809
0.079 $
0.075 $
0.322 $
0.295
$
$
10.2 (d) Total Indebtedness to EBITFV
Total indebtedness to EBITFV is a non-GAAP ratio. Management believes this non-GAAP ratio is a useful measure to
investors since it provides an understanding of the REIT’s ability to meet its debt obligations in relation to the degree it is
leveraged. Total indebtedness to EBITFV should not be considered as an alternative to other ratios determined in accordance
with IFRS. The component of total indebtedness to EBITFV which is a non-GAAP financial measure is EBITFV.
The composition of this ratio is as follows:
(in thousands of Canadian dollars)
As at
Total indebtedness
EBITFV
Total indebtedness / EBITFV
December 31, 2023
December 31, 2022
$
$
2,880,994 $
421,958
6.83
2,787,634
406,459
6.86
10.2 (e) Interest Coverage Ratio
Interest coverage ratio is a non-GAAP ratio which management believes to be a useful indicator of an entity’s ability to service
its debt. Generally, the higher the ratio is, the lower the risk of default on debt. This non-GAAP ratio is not a standardized
financial measure under IFRS and should not be considered as an alternative to other ratios determined in accordance with
IFRS. The component of interest coverage ratio which is a non-GAAP financial measure is EBITFV.
(in thousands of Canadian dollars)
For the periods ended December 31,
EBITFV (A)
Interest expense and other financing charges (B)
Interest coverage ratio (A)/(B)
Three Months Ended
Year Ended
$
$
2023
2022
2023
2022
107,263 $
103,133 $
421,958 $
406,459
29,795 $
27,743 $
114,482 $
110,672
3.60
3.72
3.69
3.67
10.2 (f) Adjusted General and Administrative Expense as a Percent of Property Revenue
Adjusted general and administrative expense as a percent of property revenue is a non-GAAP ratio. Management believes this
ratio is a useful measure since it is an indicator of an entity’s ability to manage its general and administrative expenses in
relation to property revenue without the influence of non-controllable fair value adjustments on unit-based awards. This non-
GAAP ratio is not a standardized financial measure under IFRS and should not be considered as an alternative to other ratios
determined in accordance with IFRS. The component of adjusted general and administrative expense as a percent of property
revenue which is a non-GAAP financial measure is adjusted general and administrative expense.
CT REIT 2023 ANNUAL REPORT 49
MANAGEMENT'S DISCUSSION AND ANALYSIS
(in thousands of Canadian dollars)
For the year ended December 31,
Personnel expense 1
Services Agreement with CTC
Public entity and other 1
General and administrative expense
Fair value adjustment of unit based compensation
Adjusted general and administrative expense (A)
Property revenue (B)
Year Ended
2023
9,825
$
1,094
4,318
15,237
$
(625)
15,862
552,772
$
$
2022
9,708
1,094
3,676
14,478
(866)
15,344
532,795
$
$
$
$
Adjusted general and administrative expense % of property revenue (A/B)
2.9 %
2.9 %
1 Includes unit-based awards, including loss (gain) adjustments as a result of the change in the fair market value of the Units of $(625) (YTD 2022 - $(866)) for the year ended December 31,
2023.
50 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
11.0 SELECTED QUARTERLY CONSOLIDATED INFORMATION
(in thousands of Canadian dollars,
except per unit amounts)
As at and for the quarter ended
Property revenue
Net income
Net income per unit
- basic
- diluted
FFO per unit - diluted (non-GAAP) 1
AFFO per unit - diluted (non-GAAP) 1
$
$
$
$
$
$
2023
2022
Q4
Q1
139,968 $ 137,479 $ 137,819 $ 137,506
Q2
Q3
38,239 $ 11,327 $ 109,357 $ 70,511
Q4
Q1
135,175 $ 133,155 $ 132,515 $ 131,950
Q2
Q3
74,749 $ 77,014 $ 79,771 $ 93,079
$
$
0.162 $
0.048 $
0.465 $
0.300
$
0.319 $
0.329 $
0.341 $
0.399
0.161 $
0.048 $
0.376 $
0.265
$
0.276 $
0.285 $
0.296 $
0.345
0.330 $
0.327 $
0.330 $
0.321
$
0.322 $
0.321 $
0.313 $
0.307
0.303 $
0.301 $
0.304 $
0.295
$
0.292 $
0.292 $
0.284 $
0.278
Total assets
$ 6,966,564 $ 6,956,954 $ 6,950,062 $ 6,863,797 $ 6,844,789 $ 6,763,640 $ 6,702,583 $ 6,592,386
Total indebtedness
Total distributions, net of distribution
reinvestment, to unitholders - paid
Total distributions per unit - paid
Book value per unit
Market price per unit
- high
- low
- closing as at period end
1 Non-GAAP ratio.
$ 2,880,994 $ 2,856,277 $ 2,776,260 $ 2,791,349 $ 2,787,634 $ 2,747,368 $ 2,697,073 $ 2,697,056
$ 48,151 $ 47,775 $ 46,551 $ 46,631
$ 46,128 $ 46,011 $ 44,282 $ 44,120
$
$
$
$
$
0.225 $
0.225 $
0.217 $
0.217
$
0.217 $
0.217 $
0.212 $
0.210
16.34 $
16.44 $
16.63 $
16.39
$
16.31 $
16.21 $
16.10 $
15.97
14.80 $
15.71 $
16.47 $
16.87 $
16.23 $
17.31 $
18.46 $
18.41
12.57 $
13.52 $
14.31 $
15.30 $
14.21 $
14.46 $
15.25 $
16.02
14.65 $
13.69 $
15.09 $
16.03 $
15.59 $
15.01 $
16.57 $
17.68
Q4
Q2
Q3
$ 38,239 $ 11,327 $ 109,357 $ 70,511 $ 74,749 $ 77,014 $ 79,771 $ 93,079
2023
The following table reconciles GAAP net income and comprehensive income to FFO and further reconciles FFO to AFFO:
(in thousands of Canadian dollars)
As at and for the quarter ended
Net Income and comprehensive
income
Fair value adjustment on investment
property
GP income tax expense
Lease principal payments on right-of-
use assets
Fair value adjustment of unit-based
compensation
Internal leasing expense
Funds from operations
Property straight-line rent revenue
(31,547)
367
(6,020)
20
(608)
(181)
(533)
319
(499)
234
(834)
219
(913)
318
66,669
39,334
(213)
(145)
(495)
(350)
(579)
(453)
(176)
(351)
(154)
(152)
(628)
(171)
4,180
2022
$ 77,704 $ 77,073 $ 77,809 $ 75,328 $ 75,570 $ 75,397 $ 73,412 $ 71,825
191
203
(22,077)
541
(112)
(462)
(94)
386
325
422
392
276
507
523
860
444
407
Q4
Q1
Q3
Q2
Q1
246
298
Direct leasing costs 1, 2
Capital expenditure reserve 1
Adjusted funds from operations
(290)
(6,326)
(97)
(6,213)
$ 71,474 $ 71,026 $ 71,658 $ 69,231 $ 68,515 $ 68,595 $ 66,620 $ 65,053
(105)
(6,347)
(233)
(6,243)
(112)
(6,227)
(192)
(6,327)
(362)
(6,181)
(346)
(6,208)
¹ Comparatives have been restated to conform with current year’s presentation.
² Excludes internal and external leasing costs related to development projects.
Property revenue, distributions and other financial and operational results noted above have grown at a steady rate. However,
macroeconomic factors (including, but not limited to, inflationary pressures, and higher interest rates) and market trends may
have an influence on consumer spending, the demand for space, occupancy levels and, consequently, the REIT’s operating
performance, the impact of which is difficult to predict.
Refer to CT REIT’s respective annual and interim MD&A’s issued for a discussion and analysis relating to the above periods.
CT REIT 2023 ANNUAL REPORT 51
MANAGEMENT'S DISCUSSION AND ANALYSIS
12.0 ENTERPRISE RISK MANAGEMENT
Enterprise Risk Management Framework
To preserve and enhance unitholder value over the long term, CT REIT takes a balanced approach to risk taking together
with effective risk management. The effective management of risk within CT REIT is a key priority for the Board and senior
management, as such the REIT has adopted an Enterprise Risk Management Framework (“ERM Framework”) for identifying,
assessing, monitoring, mitigating and reporting key risks.
The ERM Framework is designed to provide an integrated approach to the management of risks, through a disciplined
manner that:
•
•
•
•
Safeguards the REIT’s reputation;
Supports the achievement of the REIT’s strategic objectives, including financial goals;
Preserves and enhances unitholder value; and
Supports business planning and operations by providing a cross-functional perspective to risk management,
integrated with strategic planning and reporting processes.
Risk Governance
The foundation of the REIT’s ERM Framework is a governance approach that includes a comprehensive set of policies that,
together with the REIT’s Declaration of Trust, require the identification, assessment, monitoring, mitigation and reporting of all
Key Risks on a timely basis. The key elements of risk governance are the Board and Chief Executive Officer, supported by
senior management and the three lines of defense operating model (which includes (i) business and support functions, (ii)
oversight functions and (iii) internal audit). Clearly defined roles and responsibilities, coupled with timely monitoring and
reporting, assist in supporting a strong risk culture and effective governance of risk.
Fundamental to risk governance at the REIT is the oversight by senior management and the Audit Committee of all Key Risks
and emerging risks faced by the REIT. Members of senior management of the REIT assist the Chief Executive Officer in
discharging responsibilities with respect to managing strategies in alignment with the REIT’s risk appetite, recommending
various risk-related policies for the Board’s approval and evaluating the effectiveness of controls the REIT has in place to
mitigate risk and support the REIT’s strategy. The REIT monitors its risk exposures to assess that its business activities are
operating within approved limits or guidelines and risk appetite. Exceptions, if any, are reported to the Chief Financial Officer,
the Chief Executive Officer and to the Audit Committee and the Board, as appropriate.
Key Risks
A key element of the ERM Framework is the identification and assessment of the REIT’s key risks. A key risk is defined
as one that, alone or in combination with other interrelated risks, could have a material adverse effect on the REIT’s reputation,
financial position, and/or ability to achieve its strategic objectives. Management has developed mitigation plans for each of the
key risks, which are reviewed regularly by senior management and reported to the Audit Committee and the Board. Although
the REIT believes the measures taken to mitigate risks are reasonable, there can be no assurance that they will effectively
52 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
control all risks that may have a negative impact. In addition, there are numerous other risk factors that are difficult to predict
and could adversely affect the REIT’s reputation, financial results, operations and strategic objectives.
The following table provides an overview of each of the REIT’s key risks and other risks associated with the REIT’s business
and operations in the REIT’s risk universe, which categorizes all of the REIT’s risks into the following main categories:
Strategic, Financial, Operational, and Environmental and Social risks and related risk management strategies. Further
information on the REIT’s key risks is presented in the REIT’s 2023 AIF. CT REIT cautions that the discussion of risks,
including those risks described in the REIT’s 2023 AIF, is not exhaustive. When considering whether to purchase or sell Units
of the REIT, investors and others should carefully consider these factors as well as other uncertainties, potential events and
industry specific factors that may adversely impact the REIT’s future results.
CT REIT 2023 ANNUAL REPORT 53
MANAGEMENT'S DISCUSSION AND ANALYSIS
Key Risks
External Economic Environment
Risk Management Strategy
The REIT
is subject
to risks resulting
from
fluctuations or
The REIT regularly monitors and analyzes the external economic
fundamental changes in the external business environment.
These
conditions, demographic, consumer behaviour and
competitive
fluctuations or fundamental shifts in the macroeconomic
environment
developments in Canada related to its business. Results are
shared
as well as the environment in regions and local marketplaces
where
with the REIT executives, who are accountable for any
necessary
the REIT conducts its business could include:
amendments to the strategic and operational plans and for
on-going
• changes in the current economic environment and uncertainty with
investment decisions in order to respond to evolving market
and
respect to future potential economic disruption including recession,
economic trends.
depression, or high inflation impacting business and consumer
confidence and spending;
• changes in the economic stability of local markets such as business
layoffs, industry slow-downs, changing demographics and other
factors impacting tenants’ revenues and their ability to pay rent, and
the REIT’s ability to lease space, renew leases and derive income
from the properties in the affected market;
• changes in the economic condition and regulatory environment of
the regions in which the REIT’s properties are concentrated, which
may have a material adverse effect on the REIT’s business, cash
flows, financial condition, results of operations and ability to make
distributions to unitholders;
• changes in retail shopping behaviours and habits of consumers and
the introduction of new “technologies” and competitors impacting the
relevance of the products, sales channels, or services offered by the
REIT’s key tenant, which may result in a negative impact on their
financial position culminating in a decrease in the demand for
physical space, which could adversely affect the REIT’s financial
performance; and
• increased competition amongst investors, developers, owners and
operators of properties similar to those of the REIT could negatively
impact the availability of suitable acquisition opportunities thereby
increasing the REIT’s cost of acquisition as well as its’ ability to lease
properties, renew leases and achieve rental increases, which may
adversely impact the REIT’s financial condition and results
of
operations.
54 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
Key Risks
Key Business Relationship
Risk Management Strategy
The REIT’s relationship with its majority unitholder, CTC, is integral
The REIT benefits from the stability offered by CTC businesses
to
its business strategy and could affect the REIT’s cash
flows,
including Canadian Tire, one of Canada’s most resilient, iconic
and
operating
results, overall financial performance and its ability
to
trusted omni-channel general merchandise retailers with
high
make distributions. Key factors inherent in this relationship include:
recognition and a strong reputation throughout the communities
it
• situations where the interests of CTC and the REIT are in conflict,
serves. Appropriate governance structures,
including
policies,
CTC may utilize its ownership interest in, and contractual rights with
processes and other management activities and practices are
in
the REIT, to further CTC’s own interest which may not be the same
place to maintain and monitor the relationship between
the REIT and
as the REIT’s interest in all cases, causing the REIT not to be able to
CTC. In addition, Management regularly monitors the
operating
operate in a manner that is in its favour, which could adversely affect
results and credit ratings of CTC.
the REIT’s cash flows, operating results, valuation, and overall
financial condition;
• the dependence of the REIT’s revenues on the ability of its key
tenant, CTC, to meet its rent obligations and renew its tenancies.
While CTC has held investment grade credit ratings for over 20
years, there is no assurance that it will maintain such ratings or that
its financial position will not change over time. The future financial
performance and operating results of CTC’s business are subject to
inherent risks. A downturn in CTC’s business resulting in an inability
to meet their obligations under their leases and/or if a significant
amount of available space in the properties was not able to be
leased on economically favourable lease terms could have a material
effect on the financial performance of the REIT, its cash flows, and
the REIT’s ability to make distributions to unitholders; and
• the REIT’s dependency on the services of key personnel including
certain CTC personnel who supply necessary services to operate the
REIT for its effective management and governance. Failure
to
receive these services or the need to replace the service provider in
a short period of time could have a material adverse effect on the
REIT.
CT REIT 2023 ANNUAL REPORT 55
MANAGEMENT'S DISCUSSION AND ANALYSIS
Key Risks
Financial
Risk Management Strategy
Risks associated with macroeconomic conditions which are highly
The REIT has a Board-approved financial risk management policy in
cyclical
and volatile could have a material effect on the
REIT’s
place that governs the management of capital, funding, and other
financial
position and its ability to achieve its strategic goals
and
financial risks. The indebtedness and Class C LP Units of the REIT
aspirations. Such risks include:
are predominantly at fixed rates and its variable interest rate
• fundamental changes in the economic environment, significant
exposure is minimal. The weighted average term to redemption/
event, or volatility in the financial markets resulting in changes in
maturity of the REIT’s debt portfolio is managed to generally align
interest rates that affect the value of real estate, the value of the
with the weighted average term to maturity of the REIT’s assets. The
Units, the economics of acquisition activity and the availability of
REIT manages refinancing risk by maintaining a diversified debt
capital impacting the financial position of the REIT and its ability to
redeeming/ maturity schedule to limit the amount of debt maturing in
make distributions to its unitholders; and
any one year.
• the REIT’s ability to manage fluctuations in interest rates, access to
capital and liquidity, the price of the Units and the REIT’s degree of
leverage. Failure to develop, implement, and execute effective
strategies to manage these risks may result in insufficient capital to
absorb unexpected losses and/or changes in asset value negatively
affecting the REIT’s financial performance and increasing the REIT’s
vulnerability to a downturn in business or the economy.
Legal and Regulatory Compliance
Failure to adhere to laws and regulations by the REIT may result in
The REIT has appropriate governance structures, including policies,
regulatory related issues or decrease investor confidence and
a
processes and controls in place to comply with legal and regulatory
decline in the Unit price. Changes to laws and regulations applicable
requirements, including but not limited to the REIT’s ability to
to
the REIT may adversely affect the REIT’s financial condition,
continue to satisfy the conditions to qualify as a closed end mutual
results of operation, and distributions to unitholders, including:
fund trust and to comply with environmental laws and address any
• changes in income tax laws such that the REIT would not qualify as
material environmental issues, including climate change.
a
mutual fund trust for purposes of the Income Tax Act (“ITA”),
The REIT monitors environmental risks as they continue to evolve
including the treatment of real estate investment trusts and mutual
especially as they relate to global transition to a net-zero economy
fund trusts, or the exclusion from the definition of “SIFT TRUST” for a
and the impact of climate change.
trust qualifying as a “real estate investment trust” for a taxation year
under the ITA, which could have a material and adverse impact on
the value of the units, and on distributions to unitholders; and
• changes in various federal, provincial, territorial and municipal laws
relating to environmental matters, including climate change, which
may result in the REIT bearing the risk of cost-intensive assessment,
technologies, and the removal of contamination, hazardous or other
regulated substances causing an adverse effect on the REIT’s
financial condition, results of operation, cash available for distribution
to
unitholders.
56 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
Key Risks
Operations
Risk Management Strategy
The REIT is subject to the risk that a direct or indirect loss of
The REIT has appropriate governance structures, including policies,
operating capabilities may occur due to:
processes, contracts, service agreements and other management
• inadequate or failed operations processes (property management,
activities in place to maintain the operational performance of the
development,
redevelopment and
renovation
risks such as
REIT and to support the REIT’s reputation, business and strategic
substantial unanticipated delays and expenses or the inability to
objectives.
initiate or complete activities) that could have an adverse effect on
CT REIT is subject to the risk that a direct or indirect loss of
the REIT’s reputation, financial condition, results of operations, cash
operating capabilities may occur due to property, development,
flow, trading price of the Units, distributions to unitholders and the
redevelopment and renovation risks, disasters, health events, cyber
ability of the REIT to satisfy its principal and interest obligations;
incidents, climate change,
ineffective business continuity and
• internal or outsourced business activities and business disruptions
contingency planning, and talent shortages.
and ineffective business continuity and contingency planning, which
could adversely affect the reputation, operations and financial
performance of the REIT; and
• talent shortages due to external pressure or the inability to
effectively attract and retain talented and experienced employees,
which may negatively impact the REIT’s ability to operate its
business and execute its strategy.
13.0
INTERNAL CONTROLS AND PROCEDURES
13.1 Disclosure Controls and Procedures
Management is responsible for establishing and maintaining a system of controls and procedures over the public disclosure of
financial and non-financial information regarding CT REIT. Such controls and procedures are designed to provide reasonable
assurance that all relevant material information is gathered and reported, on a timely basis, to senior management, including
the CEO and the Chief Financial Officer (“CFO”), so that they can make appropriate decisions regarding public disclosure.
As required by CSA National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”),
an evaluation of the adequacy of the design (quarterly) and effective operation (annually) of CT REIT’s disclosure controls and
procedures was conducted, under the supervision of management, including the CEO and CFO, as at December 31, 2023.
Based on that evaluation, the CEO and the CFO have concluded that the design and operation of the system of disclosure
controls and procedures were effective as at December 31, 2023.
13.2 Internal Control Over Financial Reporting
Management is also responsible for establishing and maintaining appropriate internal controls over financial reporting to
provide reasonable assurance regarding the reliability of financial reporting and preparation of consolidated financial
statements for external purposes in accordance with IFRS.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined
to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation and
may not prevent or detect misstatements.
CT REIT 2023 ANNUAL REPORT 57
MANAGEMENT'S DISCUSSION AND ANALYSIS
As also required by NI 52-109, management, including the CEO and CFO, evaluated the adequacy of the design (quarterly)
and effective operation (annually) of CT REIT’s internal controls over financial reporting using the framework established by
the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (2013).
Based on that evaluation, the CEO and the CFO have concluded that the design and operation of CT REIT’s internal controls
over financial reporting were effective as at December 31, 2023.
13.3 Changes in Internal Control Over Financial Reporting
During the quarter and year ended December 31, 2023, there have been no changes in CT REIT’s internal controls over
financial reporting that have materially affected, or are reasonably likely to materially affect, CT REIT’s internal controls over
financial reporting.
14.0 FORWARD-LOOKING INFORMATION
This MD&A, and the documents incorporated by reference herein, contain forward-looking statements that involve a number of
risks and uncertainties, including statements regarding the outlook for CT REIT’s business and results of operations. Forward-
looking statements are provided for the purposes of providing information about CT REIT’s future outlook and anticipated
events or results and may include statements regarding known and unknown risks, uncertainties and other factors that may
cause the actual results to differ materially from those indicated. Such factors include but are not limited to general economic
conditions; financial position; business strategy; availability of acquisition opportunities; budgets; capital expenditures; financial
results, including fair value adjustments and cash flow assumptions upon which they are based; cash and liquidity; taxes; and
plans and objectives of or involving CT REIT. Statements regarding future acquisitions, developments, distributions, results,
performance, achievements, and prospects or opportunities for CT REIT or the real estate industry are forward-looking
statements. In some cases, forward-looking information can be identified by such terms such as “may”, “might”, “will”, “could”,
“should”, “would”, “occur”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potential”, “continue”, “likely”,
“schedule”, or the negative thereof or other similar expressions concerning matters that are not historical facts.
Some of the specific forward-looking statements in this document include, but are not limited to, statements with respect to CT
REIT’s:
•
•
•
•
•
•
•
•
•
•
•
growth strategy and objectives under section 2.0;
fair value of property portfolio under section 4.4;
development and related activities under section 4.6, including with respect to the redevelopment and tenancy at
Canada Square;
leasing activities under section 4.10;
recoverable capital costs under section 4.11;
capital expenditures to fund acquisitions and development activities under section 6.1;
capital strategy under section 6.11;
commitments as at December 31, 2023 under section 6.12;
distributions under section 7.3;
capital expenditures under section 10.1 (g);
access to available sources of debt and/or equity financing;
58 CT REIT 2023 ANNUAL REPORT
MANAGEMENT'S DISCUSSION AND ANALYSIS
•
•
•
expected tax treatment of CT REIT and its Distributions to unitholders;
ability to expand its asset base, make accretive acquisitions, develop or intensify its Properties and participate with
CTC in the development or intensification of the Properties; and
ability to continue to qualify as a “real estate investment trust”, as defined pursuant to the ITA.
CT REIT has based these forward-looking statements on factors and assumptions about future events and financial trends that
it believes may affect its financial condition, results of operations, business strategy and financial needs. Such factors and
assumptions include but are not limited to whether there continues to be a risk of recession in Canada and the timing and
extent of further changes to inflation and interest rates; that tax laws will remain unchanged; that the REIT will continue to
manage its liquidity and debt covenants; that conditions within the real estate market, including competition for acquisitions,
will normalize to historical levels in the near- to medium-term; that Canadian capital markets will provide CT REIT with access
to equity and/or debt at reasonable rates when required; that the redevelopment and related activities with respect to Canada
Square will proceed as planned; and that CTC will continue its involvement with the REIT on the basis described in its 2023
AIF.
Although the forward-looking statements contained in this MD&A are based upon assumptions that the REIT believes are
reasonable, given information currently available to management, there can be no assurance that actual results will be
consistent with these forward-looking statements. Forward-looking statements necessarily involve known and unknown risks
and uncertainties, many of which are beyond the REIT’s control, that may cause CT REIT’s, or the industry’s, actual results,
performance, achievements, prospects and opportunities in future periods to differ materially from those expressed or implied
by such forward-looking statements. These risks and uncertainties include, among other things, the factors discussed in
section 12.0 of this MD&A and under the “Risk Factors” section of the 2023 AIF.
For more information on the risks, uncertainties and assumptions that could cause CT REIT’s actual results to differ from
current expectations, please also refer to CT REIT’s public filings available on SEDAR+ at www.sedarplus.ca and by a link at
www.ctreit.com.
CT REIT cautions that the foregoing list of important factors and assumptions is not exhaustive and other factors could also
materially and adversely affect its results. Investors and other readers are urged to consider the foregoing risks, uncertainties,
factors and assumptions carefully in evaluating the forward-looking information and are cautioned not to place undue reliance
on such forward-looking information. Statements that include forward-looking information do not take into account the effect
that transactions or non-recurring or other special items announced or occurring after the statements are made can have on
CT REIT’s business. For example, they do not include the effect of any dispositions, acquisitions, asset write-downs or other
charges announced or occurring after such statements are made. The forward-looking information in this MD&A is based on
certain factors and assumptions made as of the date hereof or the date of the relevant document incorporated herein by
reference, as applicable. CT REIT does not undertake to update the forward-looking information, whether written or oral, that
may be made from time to time by it or on its behalf, to reflect new information, future events or otherwise, except as required
by applicable securities laws.
CT REIT 2023 ANNUAL REPORT 59
MANAGEMENT'S DISCUSSION AND ANALYSIS
Information contained in or otherwise accessible through the websites referenced in this MD&A does not form part of this
MD&A and is not incorporated by reference into this MD&A. All references to such websites are inactive textual references and
are for information only.
Commitment to disclosure and investor communication
The Investors section of the REIT’s website, accessible by a link at www.ctreit.com includes the following documents and
information of interest to investors:
•
Annual Information Form;
• Consolidated financial statements and accompanying notes for the year ended December 31, 2023;
• Management Information Circular;
•
•
•
the Base Shelf Prospectus and related prospectus supplements;
quarterly financial statements and related MD&As; and
conference call webcasts (archived for one year).
Additional information about the REIT has been filed electronically with various securities regulators in Canada through
SEDAR+ and is available online at www.sedarplus.ca.
February 13, 2024
60 CT REIT 2023 ANNUAL REPORT
Index
CONSOLIDATED
FINANCIAL
STATEMENTS
AND NOTES
CON SOLI DATED F IN A N CIA L STATE MEN TS AND NOTES
III
ANNUAL REPORT 2023
Management’s Responsibility for Financial Statements
Independent Auditor’s Report
Consolidated Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Investment Properties
Note 1 Nature of CT Real Estate Investment Trust
Note 2 Basis of Presentation
Note 3 Material Accounting Policy Information
Note 4
Note 5 Other Assets
Note 6 Class C LP Units
Note 7 Mortgages Payable
Note 8 Debentures
Leases
Note 9
Note 10 Other Liabilities
Note 11 Credit Facilities
Note 12 Equity
Note 13 Unit-Based Compensation Plans
Note 14 Non-controlling Interests
Note 15 Revenues and Expenses
Note 16 General and Administrative Expense
Note 17 Net Interest and Other Financing Charges
Note 18 Changes in Working Capital and Other
Note 19 Segmented Information
Note 20 Commitments and Contingencies
Note 21 Related-Party Transactions
Note 22 Financial Instruments and Risk Management
Note 23 Capital Management and Liquidity
Glossary of Terms
62
63
67
68
69
70
71
71
74
78
80
81
82
83
83
85
85
86
89
90
90
91
91
92
92
92
92
94
96
99
Management’s Responsibility for Financial Statements
The management of CT Real Estate Investment Trust (“CT REIT”) is responsible for the integrity and reliability of the
accompanying consolidated financial statements. These consolidated financial statements have been prepared by
management in accordance with International Financial Reporting Standards, and include amounts based on judgments and
estimates. All financial information in our Management’s Discussion and Analysis is consistent with these consolidated
financial statements.
Management is responsible for establishing and maintaining adequate systems of internal control over financial reporting.
These systems are designed to provide reasonable assurance that the financial records are reliable and form a proper basis
for the timely and accurate preparation of financial statements. Management has assessed the effectiveness of CT REIT’s
internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and concluded that CT REIT’s internal
control over financial reporting was effective as at the date of these consolidated statements.
The Board of Trustees oversees management’s responsibilities for the consolidated financial statements primarily through the
activities of its Audit Committee, which is comprised solely of trustees who are neither officers nor employees of CT REIT.
This Committee meets with management and CT REIT’s independent auditors, Deloitte LLP, to review the consolidated
financial statements and recommend approval to the Board of Trustees. The Audit Committee is responsible for making
recommendations to the Board of Trustees with respect to the appointment of and, subject to the approval of the Unitholders
authorizing the Board of Trustees to do so, approving the remuneration and terms of engagement of CT REIT’s auditors. The
Audit Committee also meets with the auditors, without the presence of management, to discuss the results of their audit.
The consolidated financial statements have been audited by Deloitte LLP, in accordance with Canadian generally accepted
auditing standards. Their report is presented below.
<< Kevin Salsberg >>
<< Lesley Gibson >>
Kevin Salsberg
President and Chief Executive Officer
Lesley Gibson
Chief Financial Officer
February 13, 2024
62 CT REIT 2023 ANNUAL REPORT
Independent Auditor's Report
To the Unitholders and the Board of Trustees of
CT Real Estate Investment Trust
Opinion
We have audited the consolidated financial statements of CT Real Estate Investment Trust (the "REIT"),
which comprise the consolidated balance sheets as at December 31, 2023 and 2022, and the consolidated
statements of income and comprehensive income, changes in equity and cash flows for the years then
ended, and notes to the consolidated financial statements, including material accounting policy
information (collectively referred to as the "financial statements").
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of the REIT as at December 31, 2023 and 2022, and its financial performance and its cash flows
for the years then ended in accordance with International Financial Reporting Standards ("IFRS").
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards ("Canadian
GAAS"). Our responsibilities under those standards are further described in the Auditor’s Responsibilities
for the Audit of the Financial Statements section of our report. We are independent of the REIT in
accordance with the ethical requirements that are relevant to our audit of the financial statements in
Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Key Audit Matter
A key audit matter is a matter that, in our professional judgment, was of most significance in our audit of
the consolidated financial statements for the year ended December 31, 2023. This matter was addressed
in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on this matter.
Fair Value of Investment Properties — Refer to Note 4 to the financial statements
Key Audit Matter Description
The REIT measures investment properties at fair value subsequent to acquisition. The fair value of each
investment property is estimated using the discounted cash flow (“DCF”) method. This method requires
management to make estimates and assumptions.
The assumptions with the highest degree of subjectivity and impact on fair values are the discount rates
and terminal capitalization rates. Auditing these assumptions required a high degree of auditor judgment
and this resulted in an increased extent of audit effort, including the need to involve fair value specialists.
CT REIT 2023 ANNUAL REPORT 63
How the Key Audit Matter Was Addressed in the Audit
Our audit procedures related to the discount rates and terminal capitalization rates used to determine
the fair value of the investment properties included the following, among others:
• Evaluated the effectiveness of controls over management’s process for determining the fair value of
investment properties, including those over the determination of the discount rates and terminal
capitalization rates.
• With the assistance of fair value specialists, evaluated the reasonableness of management’s discount
rates and terminal capitalization rates by considering recent market transactions and industry surveys.
Other Information
Management is responsible for the other information. The other information comprises:
• Management's Discussion and Analysis
• The information, other than the financial statements and our auditor’s report thereon, in the 2023 CT
REIT Annual Report (the "Annual Report").
Our opinion on the financial statements does not cover the other information and we do not and will not
express any form of assurance conclusion thereon. In connection with our audit of the financial
statements, our responsibility is to read the other information identified above and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge
obtained in the audit, or otherwise appears to be materially misstated.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on
the work we have performed on this other information, we conclude that there is a material
misstatement of this other information, we are required to report that fact in this auditor’s report. We
have nothing to report in this regard.
The Annual Report is expected to be made available to us after the date of the auditor's report. If, based
on the work we will perform on this other information, we conclude that there is a material misstatement
of this other information, we are required to report that fact to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the
Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with IFRS, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is responsible for assessing the REIT’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless management either intends to liquidate the REIT or to cease
operations, or has no realistic alternative but to do so.
64 CT REIT 2023 ANNUAL REPORT
Those charged with governance are responsible for overseeing the REIT's financial reporting process.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with Canadian GAAS will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these financial statements.
As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the REIT's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the REIT's ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify
our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the REIT to cease to continue as a going
concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
CT REIT 2023 ANNUAL REPORT 65
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor's report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Rose Fitzsimon.
/s/ Deloitte LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Ontario
February 13, 2024
66 CT REIT 2023 ANNUAL REPORT
Consolidated Balance Sheets
(Canadian dollars, in thousands)
As at
Assets
Non-current assets
Investment properties
Other assets
Current assets
Tenant and other receivables
Other assets
Cash and cash equivalents
Total assets
Liabilities
Non-current liabilities
Class C LP Units
Mortgages payable
Debentures
Lease liabilities
Other liabilities
Current liabilities
Class C LP Units
Mortgages payable
Credit facilities
Lease liabilities
Other liabilities
Distributions payable
Total liabilities
Equity
Unitholders’ equity
Non-controlling interests
Total equity
Total liabilities and equity
Note December 31, 2023
December 31, 2022
4
5
5
6
7
8
9
10
6
7
11
9
10
12
$
6,936,000 $
6,833,000
1,704
6,937,704
1,863
6,834,863
3,455
4,639
20,766
28,860
3,734
3,581
2,611
9,926
6,966,564
$
6,844,789
1,251,550 $
1,451,550
$
$
8,623
1,420,313
100,177
5,198
2,785,861
200,000
508
—
923
113,875
17,628
332,934
9,128
1,170,905
102,223
5,150
2,738,956
—
56,167
99,884
649
104,987
16,973
278,660
3,118,795
3,017,616
12
12, 14
1,707,336
2,140,433
3,847,769
$
6,966,564 $
1,698,250
2,128,923
3,827,173
6,844,789
The related notes form an integral part of these consolidated financial statements.
<>
John O’Bryan
Trustee
<>
Anna Martini
Trustee
CT REIT 2023 ANNUAL REPORT 67
Consolidated Statements of Income and Comprehensive Income
(Canadian dollars, in thousands, except per unit amounts)
For the year ended December 31,
Note
2023
2022
Year ended
Property revenue
Property expense
General and administrative expense
Net interest and other financing charges
Fair value adjustment on investment properties
Net income and comprehensive income
Net income and comprehensive income attributable to:
Unitholders
Non-controlling interests
Net income per unit - basic
Net income per unit - diluted
15
15
16
17
4
$
552,772 $
532,795
(115,523)
(15,237)
(113,942)
(78,636)
(111,133)
(14,478)
(110,416)
27,845
$
229,434 $
324,613
12
$
105,287 $
12, 14
$
$
$
12
12
124,147
229,434 $
0.976 $
0.870 $
148,264
176,349
324,613
1.387
1.185
The related notes form an integral part of these consolidated financial statements.
68 CT REIT 2023 ANNUAL REPORT
Consolidated Statements of Changes in Equity
(Canadian dollars, in thousands)
Note
Units
Retained Unitholders’
Equity
Earnings
Non-
controlling
interests Total Equity
Balance at December 31, 2022
Net income and comprehensive income for the period
Distributions
12, 14
12
Issuance of Units under Distribution Reinvestment Plan
and other
Units repurchased and cancelled
Automatic purchase plan
Balance at December 31, 2023
12
12
12
$ 1,112,415 $
585,835 $ 1,698,250 $ 2,128,923 $ 3,827,173
—
—
18,066
(6,433)
—
$ 1,124,048 $
105,287
105,287
124,147
229,434
(95,635)
(95,635)
(112,637)
(208,272)
—
18,066
—
18,066
101
(6,332)
(12,300)
(12,300)
583,288 $ 1,707,336 $ 2,140,433 $ 3,847,769
(6,332)
(12,300)
—
—
Note
Units
Retained Unitholders’
Equity
Earnings
Non-
controlling
interests Total Equity
Balance at December 31, 2021
Net income and comprehensive income for the period
Issuance of Class B LP Units, net of issue costs
Distributions
Issuance of Units under Distribution Reinvestment Plan
Balance at December 31, 2022
12, 14
12
12
12
$ 1,093,257 $
529,108 $ 1,622,365 $ 2,055,784 $ 3,678,149
—
—
19,158
148,264
148,264
176,349
324,613
—
(91,537)
—
—
5,617
5,617
(91,537)
19,158
(108,827)
—
(200,364)
19,158
$ 1,112,415 $
585,835 $ 1,698,250 $ 2,128,923 $ 3,827,173
The related notes form an integral part of these consolidated financial statements.
CT REIT 2023 ANNUAL REPORT 69
Consolidated Statements of Cash Flows
(Canadian dollars, in thousands)
For the year
ended December 31,
Cash generated from (used for):
Operating activities
Net income
Add/(deduct):
Fair value adjustment on investment properties
Property straight-line rent revenue
Deferred income tax
Net interest and other financing charges
Changes in working capital and other
Cash generated from operating activities
Investing activities
Income-producing property investments
Development and intensification activities
Capital expenditures recoverable from tenants
Proceeds of disposition
Cash used for investing activities
Financing activities
Proceeds from issuance of debentures
Redemption of debentures
Unit distributions
Unit repurchased under normal course issuer bid
Class B LP Unit distributions paid or loaned
Payments on Class C LP Units paid or loaned
Credit facilities (repayments) draws, net
Lease principal payments on right-of-use assets
Mortgage principal repayments
Net interest paid
Debenture issuance costs
Debenture settlement costs
Class B LP Unit issuance costs
Cash used for financing activities
Cash generated/(used) in the period
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
The related notes form an integral part of these consolidated financial statements.
70 CT REIT 2023 ANNUAL REPORT
Year ended
Note
2023
2022
4
15
17
18
4
8
12
6, 17
11
7
$
229,434 $
324,613
78,636
1,707
31
113,942
1,305
(27,845)
(1,844)
(115)
110,416
(5,952)
$
425,055 $
399,273
(2,859)
(152,317)
(31,742)
389
(21,664)
(167,811)
(30,142)
—
$
(186,529) $
(219,617)
250,000
—
(76,793)
(6,332)
250,000
(150,000)
(72,040)
—
(112,315)
(108,501)
(63,962)
(99,884)
(852)
(56,078)
(53,019)
(1,136)
—
—
(63,962)
20,584
(564)
(10,081)
(43,807)
(1,455)
(744)
(30)
$
$
$
(220,371) $
(180,600)
18,155 $
2,611
20,766 $
(944)
3,555
2,611
Notes to the Consolidated Financial Statements
For the year ended December 31, 2023 and 2022
(All dollar amounts are in thousands, except unit and per unit amounts)
1. NATURE OF CT REAL ESTATE INVESTMENT TRUST
CT Real Estate Investment Trust is an unincorporated, closed-end real estate investment trust. CT Real Estate Investment
Trust and its subsidiaries, unless the context requires otherwise, are together referred to in these consolidated financial
statements as “CT REIT” or the “REIT”. CT REIT commenced operations on October 23, 2013, and was formed to own
income-producing commercial properties located primarily in Canada. The principal and registered head office of CT REIT is
located at 2180 Yonge Street, Toronto, Ontario, M4P 2V8.
Canadian Tire Corporation, Limited (“CTC”) owned a 68.4% effective interest in CT REIT as of December 31, 2023,
consisting of 33,989,508 of the issued and outstanding units of CT REIT (“Units”) and all of the issued and outstanding Class
B limited partnership units (“Class B LP Units”) of CT REIT Limited Partnership (the “Partnership”), which are economically
equivalent to and exchangeable for Units. CTC also owns all of the issued and outstanding Class C limited partnership units
(“Class C LP Units”) of the Partnership (see Note 6). The Units are listed on the Toronto Stock Exchange (the “TSX”) under
the symbol CRT.UN.
2. BASIS OF PRESENTATION
(a) Fiscal year
The fiscal years for the consolidated financial statements and the notes presented are for the years ended December 31, 2023
and 2022.
(b) Statement of compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) using the accounting policies that are described herein.
These consolidated financial statements were approved for issuance by CT REIT’s Board of Trustees (the “Board”), on the
recommendation of its Audit Committee, on February 13, 2024.
(c) Basis of presentation
These consolidated financial statements have been prepared on the historical cost basis except for investment properties and
liabilities for unit-based compensation plans, which are measured at fair value.
These financial statements are presented in Canadian dollars (“C$”), which is CT REIT’s functional currency, rounded to the
nearest thousand, except per unit amounts.
CT REIT 2023 ANNUAL REPORT 71
(d) Critical judgments in applying material accounting policy information
The following are the critical judgments that have been made in applying CT REIT’s accounting policies and that have the
most material effect on the amounts in the consolidated financial statements:
(i) Leases
CT REIT as a lessor
The REIT’s policy for revenue recognition as a lessor is described in Note 3(e). In applying this policy, judgments are
made with respect to whether tenant improvements provided in connection with a lease enhance the value of the
leased property, which determines whether such amounts are treated as additions to investment property as well as
the point in time at which revenue recognition under the lease commences, or constitutes a tenant incentive that is
amortized as a reduction of lease revenue over the initial term of the lease.
The REIT also makes judgments in assessing the classification of its leases with tenants as operating leases, in
particular long-term leases in single tenant properties. The REIT has determined that all of its leases are operating
leases.
CT REIT as a lessee
For the measurement of lease liabilities with respect to the ground leases with third party landlords, the REIT
considers all factors that create an economic incentive to exercise extension options, or not exercise termination
options available in its leasing arrangements. Extension options, or periods subject to termination options, are only
included in the lease term if the REIT determines it is reasonably certain to be extended or not terminated. The
assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this
assessment and that is within the control of the lessee.
The REIT uses its incremental borrowing rate to account for the ground leases with third party landlords. The implicit
rates in the ground leases, fair value of the underlying property and the initial direct costs incurred by the lessor
related to the leased assets are not readily available information from the lessor. The REIT determines the
incremental borrowing rate as the rate of interest that it would pay to borrow over a similar term and with a similar
security the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic
environment.
(ii) Investment properties
CT REIT applies judgment in determining whether the properties it acquires are considered to be asset acquisitions
or business combinations. CT REIT considers all properties acquired to date to be asset acquisitions.
Judgment is applied in determining whether certain costs are additions to the carrying amount of the investment
property. For properties under development, CT REIT exercises judgment in determining when development activities
have commenced, when and how much borrowing costs are to be capitalized to the development project, and the
point of practical completion.
72 CT REIT 2023 ANNUAL REPORT
On a periodic basis, CT REIT obtains independent appraisals such that approximately 80% of its property portfolio, by
value, are externally appraised over a four-year period.
(iii) Income taxes
CT REIT makes judgments that, with the exception of transactions involving CT REIT GP Corp. (the “GP”), deferred
income taxes are not recognized in CT REIT’s financial statements on the basis that CT REIT can deduct
distributions paid such that its liability for income taxes is substantially reduced or eliminated for the period, CT REIT
intends to continue to distribute its taxable income and therefore continue to qualify as a real estate investment trust
for the foreseeable future.
(iv) Consolidation
CT REIT makes judgments in the application of IFRS 10 - Consolidated Financial Statements in its assessment of
control over the Partnership and its subsidiaries collectively the "Consolidated Partnership", including the purpose for
which the Consolidated Partnership was created, the power to direct the relevant activities of the Consolidated
Partnership, its exposure or rights to the variable returns of the Consolidated Partnership and its ability to use its
power to affect its returns.
(v) Proportionate consolidation of interest in Canada Square
CT REIT makes judgments in the application of IFRS 11 - Joint Arrangements in its assessment of joint control over
the one-half interest it holds in Canada Square, a mixed-use commercial property in Toronto, Ontario (the “Co-
Ownership”), and its rights to the assets and obligations for the liabilities related to the Co-Ownership.
(e) Critical accounting estimates and assumptions
CT REIT makes estimates and assumptions that affect the carrying amounts of assets and liabilities, the disclosure of
contingent assets and liabilities, and the reported amount of earnings for the period. Actual results may differ from estimates.
The estimates and assumptions underlying the valuation of investment properties are set out in Note 4 and are considered
critical.
(f) Standards, amendments and interpretations issued and adopted
The following amendment was adopted for the fiscal year ended December 31, 2023, and accordingly, has been applied in
preparing these consolidated financial statements.
(i)
Improving accounting policy disclosures and clarifying distinction between accounting policies and
accounting estimates (Amendments to IAS 8)
In February 2021, the International Accounting Standards Board (“IASB”) issued narrow-scope amendments to IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors.
Amendments to IAS 8 clarify how companies should distinguish changes in accounting policies from changes in
accounting estimates. That distinction is important as changes in accounting estimates are applied prospectively only
to future transactions and other future events, whereas changes in accounting policies are generally applied
retrospectively to past transactions and other past events.
CT REIT 2023 ANNUAL REPORT 73
The implementation of these amendments did not have a significant impact on CT REIT.
(g) Standards, amendments and interpretations issued but not yet adopted
The following new standards, amendments and interpretations have been issued but are not effective for the fiscal year ended
December 31, 2023, and accordingly, have not been applied in preparing these consolidated financial statements.
(i) Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
In January 2020, the IASB issued an amendment to IAS 1, Presentation of Financial Statements to clarify its
requirements for the presentation of liabilities in the statement of financial position. The amendment clarified that the
classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting
period and that classification is unaffected by expectations about whether an entity will exercise its right to defer
settlement of a liability. It also introduced a definition of ‘settlement’ to make clear that settlement refers to the transfer
to the counterparty of cash, equity instruments, other assets or services. On October 31, 2022, the IASB issued Non-
Current Liabilities with Covenants (Amendments to IAS 1). These amendments specify that covenants to be complied
with after the reporting date do not affect the classification of debt as current or non-current at the reporting date.
The amendments are effective for annual reporting periods beginning on or after January 1, 2024. Earlier application
is permitted. The implementation of these amendments is not expected to have a significant impact on CT REIT.
3. MATERIAL ACCOUNTING POLICY INFORMATION
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial
statements.
(a) Basis of consolidation
These consolidated financial statements include the accounts of CT REIT and its consolidated subsidiaries consisting of the
Consolidated Partnership and the GP and their subsidiaries, which are the entities over which CT REIT has control. Control
exists when CT REIT has the ability to direct the relevant activities of an entity, has exposure or rights to variable returns from
its involvement with the entity and has the ability to affect those returns through its power over the entity. CT REIT reassesses
whether or not it controls an entity if facts and circumstances indicate that there are changes to one or more of the three
elements of control.
Consolidation of a subsidiary begins when CT REIT obtains control over the subsidiary and ceases when CT REIT loses
control of the subsidiary. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions
between CT REIT and its subsidiaries, and among subsidiaries of CT REIT, are eliminated on consolidation.
Net income and comprehensive income are attributed to the Unitholders of CT REIT and to the non-controlling interest even if
this results in the non-controlling interest having a deficit balance.
74 CT REIT 2023 ANNUAL REPORT
CT REIT holds all of the issued and outstanding Class A limited partnership units (“Class A LP Units”) of the Partnership,
which are the sole class of Partnership units that carry voting rights. In addition, CT REIT holds all of the issued and
outstanding shares of the GP, the general partner of the Partnership, which has the power to direct the relevant activities of the
Partnership. Accordingly, CT REIT is exposed to variable returns from its interest in the Partnership and has the ability to direct
the relevant activities thereof to affect its returns. Therefore CT REIT consolidates the Partnership and its subsidiaries.
Non-controlling interests in the equity of the Partnership, which consists of Class B LP Units held by a wholly owned subsidiary
of CTC, are shown separately in equity on the Consolidated Balance Sheets.
(b) Joint arrangements
A joint arrangement is an arrangement in which two or more parties have joint control. Joint control is the contractually agreed
sharing of control whereby decisions about relevant activities require unanimous consent of the parties sharing control. A joint
arrangement is classified as a joint operation when the parties that have joint control of the arrangement have rights to the
assets and obligations for the liabilities related to the arrangement. A joint arrangement is classified as a joint venture when the
parties that have joint control of the arrangement have rights to the net assets of the arrangement. A party to a joint operation
records its interest in the assets, liabilities, revenue and expenses of the joint operation.
CT REIT has a one-half interest in the Co-Ownership, pursuant to a co-ownership arrangement. The Co-Ownership is a joint
arrangement as the material decisions about relevant activities require unanimous consent of the co-owners. This joint
arrangement is a joint operation as each co-owner has rights to the assets and obligations for the liabilities related to the Co-
Ownership. Accordingly, CT REIT recognizes its proportionate share of the assets, liabilities, revenue and expenses of the Co-
Ownership in its financial statements.
(c) Investment properties
Investment properties include income-producing properties and properties under development that are held by CT REIT to
earn rental income. CT REIT accounts for its investment properties in accordance with IAS 40 - Investment Property. For
acquired investment properties that meet the definition of a business, the acquisition is accounted for as a business
combination in accordance with IFRS 3 - Business Combinations, otherwise they are initially measured at cost including
directly attributable acquisition costs. Subsequent to acquisition, investment properties are carried at fair value, which is
determined based on available market evidence at the balance sheet date including, among other things, rental revenue from
current leases and reasonable and supportable assumptions that represent what knowledgeable, willing parties would assume
about rental revenue from future leases less future cash outflows in respect of capital expenditures. Gains and losses arising
from changes in fair value are recognized in net income in the period of change.
The initial cost of properties under development includes the acquisition cost of the properties, direct development costs, realty
taxes and borrowing costs attributable to properties under development. Borrowing costs associated with direct expenditures
on properties under development are capitalized. The amount of capitalized borrowing costs is determined first by reference to
property-specific borrowings, where relevant, and otherwise by applying a weighted average cost of borrowings to eligible
expenditures after adjusting for borrowings associated with other specific developments. Where borrowings are associated
with specific developments, the amount capitalized is the gross cost incurred on those borrowings less any investment income
arising on their temporary investment. Borrowing costs are capitalized from the commencement of the development until the
date of practical completion. The capitalization of borrowing costs is suspended if there are prolonged periods when
CT REIT 2023 ANNUAL REPORT 75
development activity is interrupted. Practical completion is when the property is capable of operating in the manner intended
by management. Generally, this occurs on completion of construction and receipt of all necessary occupancy and other
material permits.
If considered reliably measurable, properties under development are carried at fair value. Properties under development are
measured at cost if fair value is not reliably measurable. In determining the fair value of properties under development,
management considers, among other things, the development risk of the property, the provisions of the construction contract,
the stage of completion and the level of reliability of cash inflows after completion.
Leasing costs incurred by CT REIT in negotiating and arranging tenant leases are added to the carrying amount of investment
properties. Payments to tenants under lease contracts are characterized as either capital expenditures in the form of tenant
improvements that enhance the value of the property or as lease inducements. Tenant improvements are capitalized as part of
investment properties. Lease inducements are capitalized as a component of investment properties and are amortized over
the term of the lease as a reduction of lease revenue.
When an investment property is sold, the gain or loss is determined as the difference between the net disposal proceeds and
the carrying amount of the property and is recognized in net income in the period of disposal.
(d) Leases - Lessee
The REIT assesses whether a contract is or contains a lease, at inception of the contract. Leases are recognized as a right-of-
use asset and corresponding liability at the commencement date. Each lease payment included in the lease liability is
apportioned between the repayment of the liability and a finance cost. The finance cost is recognized in net interest and other
financing charges in the Consolidated Statements of Income and Comprehensive Income over the lease period, so as to
produce a constant periodic rate of interest on the remaining balance of the liability for each period. Lease liabilities include the
net present value of fixed payments (including in-substance fixed payments), variable lease payments that are based on an
index or a rate or subject to a fair market value renewal, amounts expected to be payable by the lessee under residual value
guarantees, the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and payments of
penalties for terminating the lease, if the lease term reflects the lessee exercising that option. The REIT allocates the
consideration in the contract to each lease component on the basis of the relative standalone price of the lease component
and the aggregate stand-alone price of the non-lease components. The lease liability is net of lease incentives receivable. The
lease payments are discounted using the interest rate implicit in the lease or, if that rate cannot be determined, the lessee’s
incremental borrowing rate. The period over which the lease payments are discounted is the reasonably certain lease term,
including renewal options that the REIT is reasonably certain to exercise. Renewal options are included in a number of leases
across the REIT.
Right-of-use assets are measured at fair value and are included in investment properties in the Consolidated Balance Sheets;
and corresponding fair value adjustments are reflected in fair value adjustment on investment properties in the Consolidated
Statements of Income and Comprehensive Income.
76 CT REIT 2023 ANNUAL REPORT
(e) Revenue recognition - Lessor
CT REIT has retained substantially all of the risks and benefits of ownership of its investment properties and therefore
accounts for leases with its tenants as operating leases. Revenue recognition under a lease commences when the tenant has
a right to use the leased asset. Generally, this occurs on the lease inception date or, where CT REIT is required to make
additions to the property in the form of tenant improvements that enhance the value of the property, upon substantial
completion of those improvements. Property revenue includes all amounts earned from tenants related to lease agreements
including property tax, operating cost and other recoveries.
The total amount of lease payments to be received from operating leases is recognized on a straight-line basis over the term
of the lease. A straight-line rent receivable, which is included in the carrying amount of investment properties, is recorded for
the difference between the rental revenue recorded and the contractual amount of minimum base rent received or receivable.
(f)
Income taxes
CT REIT is a “mutual fund trust” under the Income Tax Act (Canada). The Trustees intend to distribute or designate all taxable
income directly earned by CT REIT to Unitholders and to deduct such distributions for income tax purposes.
Legislation relating to the federal income taxation of Specified Investment Flow Through (“SIFT”) trusts or partnerships provide
that certain distributions from a SIFT will not be deductible in computing the SIFT’s taxable income and that the SIFT will be
subject to tax on such distributions at a rate that is substantially equivalent to the general tax rate applicable to Canadian
corporations. However, distributions paid by a SIFT as a return of capital should generally not be subject to tax.
Under the SIFT rules, the taxation regime will not apply to a real estate investment trust that meets prescribed conditions
relating to the nature of its assets and revenue (the “REIT Exception”). CT REIT has reviewed the SIFT rules and has
assessed their interpretation and application to CT REIT’s assets and revenue. While there are uncertainties in the
interpretation and application of the SIFT rules, CT REIT believes that it meets the REIT Exception. Accordingly, with the
exception of transactions with the GP, no net current income tax expense or deferred income tax assets or liabilities have been
recorded in the consolidated financial statements.
(g) Class C LP Units
Each series of the Class C LP Units are redeemable, at the option of the holder, at a specified future date and can be settled
at the option of the Partnership in cash or a variable number of Class B LP Units. Accordingly, the Class C LP Units are
classified as financial liabilities and fixed payments on the Class C LP Units are presented as interest expense in the
consolidated statement of income and comprehensive income using the effective interest method.
(h) Non-controlling interests
Class B LP Units are classified as non-controlling interests and are presented as a component of equity as they represent
equity interests in the Partnership not attributable, directly or indirectly, to CT REIT.
CT REIT 2023 ANNUAL REPORT 77
4. INVESTMENT PROPERTIES
The following table summarizes CT REIT’s property portfolio:
Year Ended
December 31, 2023
Year Ended
December 31, 2022
Income-
producing
properties
Properties
Under
Development
Total
investment
properties
Income-
producing
properties
Properties
Under
Development
Total
investment
properties
Balance, beginning of period
$
6,703,462 $
129,538
6,833,000
$
6,409,844 $
79,156 $
6,489,000
Property investments
Intensifications
Developments
Development land
Capitalized interest and property taxes
Transfers from PUD
Transfers to PUD
Right-of-use assets - lease amendments
and additions
Fair value adjustment on investment
properties
Straight-line rent
Recoverable capital expenditures
Dispositions
2,087
—
—
—
—
—
71,211
70,288
325
7,343
206,780
(206,780)
(14,405)
14,405
2,087
71,211
70,288
325
7,343
—
—
—
—
—
—
—
(1,805)
(78,636)
(1,700)
34,276
(389)
—
—
—
—
—
(1,805)
27,047
(78,636)
(1,700)
34,276
(389)
27,845
1,844
26,835
—
27,375
—
27,375
136,674
136,674
182,672
(182,672)
76,246
16,468
3,666
—
—
—
—
—
—
76,246
16,468
3,666
—
—
27,047
27,845
1,844
26,835
—
Balance, end of period
$
6,849,670
$
86,330
$
6,936,000
$
6,703,462
$
129,538
$
6,833,000
Investment properties are measured at fair value, determined using the discounted cash flow method. Under this methodology,
discount rates are applied to the projected annual operating cash flows, generally over a minimum term of ten years, and
include a terminal value based on a capitalization rate applied to the estimated net operating income in the terminal year. The
Property portfolio is internally valued each quarter with external appraisals performed for a portion of the portfolio on a semi-
annual basis. Approximately 80% of the Property portfolio (by value) is appraised externally by independent national real
estate appraisal firms over a four-year period.
Included in CT REIT’s Property portfolio are 12 (December 31, 2022 – 11) Properties which are situated on ground leases with
remaining current terms of up to 32 years (December 31, 2022 – up to 33 years), and an average remaining current term of
approximately 15 years (December 31, 2022 – 14 years). These 12 ground leases are included in investment properties as
right-of-use assets in the amounts of $102,371 as at December 31, 2023 (December 31, 2022 - $104,182).
78 CT REIT 2023 ANNUAL REPORT
The significant inputs used to determine the fair value of CT REIT’s income-producing properties and Properties Under
Development are as follows:
Number of Properties
Value at the period end
Discount rate1
Terminal capitalization rate 1
Hold period (years)
1 Weighted average rate.
Year Ended
December 31, 2023
Year Ended
December 31, 2022
374
373
$
6,936,000
$
6,833,000
7.20 %
6.71 %
11
7.01 %
6.51 %
11
The estimates of fair value are sensitive to changes in the investment metrics and forecasted future cash flows for each
Property. The sensitivity analysis in the table below indicates the approximate impact on the fair value of the Property portfolio
resulting from changes in the terminal capitalization and discount rates assuming no changes in other inputs.
Rate sensitivity
+ 75 basis points
+ 50 basis points
+ 25 basis points
Period ended
- 25 basis points
- 50 basis points
- 75 basis points
Year Ended
Year Ended
December 31, 2023
December 31, 2022
Fair value
Change in fair
value
Fair value
Change in fair
value
$
6,254,000 $
(682,000) $
6,166,000 $
(667,000)
6,466,000
6,692,000
(470,000)
(244,000)
6,380,000
6,588,000
(453,000)
(245,000)
$
6,936,000 $
— $
6,833,000 $
—
7,200,000
7,485,000
264,000
549,000
7,096,000
7,384,000
263,000
551,000
$
7,796,000 $
860,000 $
7,701,000 $
868,000
CT REIT 2023 ANNUAL REPORT 79
2023 Investment and Development Activity
Funding of investment and development activities for the year ended December 31, 2023 was as follows:
Property
investments
Development
land Developments
Intensifications
Total
2023 Investment and Development Activity
Funded with working capital to CTC
$
Funded with working capital to third parties
Funded with Credit Facilities/cash
Capitalized interest and property taxes
— $
2,087
—
—
— $
46,509 $
70,904 $
117,413
—
325
—
23,779
—
7,343
307
—
—
26,173
325
7,343
Total costs
$
2,087 $
325 $
77,631 $
71,211 $
151,254
2022 Investment and Development Activity
Funding of investment and development activities for the year ended December 31, 2022 was as follows:
2022 Investment and Development Activity
Property
investments
Development
land
Developments
Intensifications
Funded with working capital to CTC
$
8,916 $
3,918 $
14,361 $
70,822 $
Funded with working capital to third parties
Funded with Credit Facilities
Capitalized interest and property taxes
Issuance of Class B LP Units to CTC
10,488
2,324
—
5,647
6,324
6,226
—
—
30,073
31,812
3,666
—
6,807
59,045
—
—
Total
98,017
53,692
99,407
3,666
5,647
Total costs
$
27,375 $
16,468 $
79,912 $
136,674 $
260,429
5. OTHER ASSETS
Other assets include the following:
Prepaid property taxes
Other prepaid expenses
Other assets
Current
Non-current
Other assets
80 CT REIT 2023 ANNUAL REPORT
December 31, 2023
December 31, 2022
$
$
$
$
1,615 $
4,728
6,343
$
4,639 $
1,704
6,343
$
1,715
3,729
5,444
3,581
1,863
5,444
6. CLASS C LP UNITS
The Class C LP Units entitle the holder to a fixed cumulative monthly payment, during the fixed rate period for each Series of
Class C LP Units (the “Current Fixed Rate Period”). Such payments are made in priority to distributions made to holders of the
Class B LP Units and units representing an interest in CT REIT GP Corp. (“GP”), subject to certain exceptions.
On expiry of the Current Fixed Rate Period applicable to each series of Class C LP Units, and each five-year period
thereafter, each such series of Class C LP Units is redeemable at par (together with all accrued and unpaid payments
thereon) at the option of the Partnership or the holder, upon giving at least 120 days’ prior notice. The Partnership also has
the ability to settle any of the Class C LP Units at any time at a price equal to the greater of par and a price to provide a yield
equal to the then equivalent Government of Canada bond yield plus a spread, so long as such redemption is in connection
with a sale of properties.
During the five-year period beginning immediately following the completion of the initial fixed rate period, and each five-year
period thereafter, if not redeemed, the fixed payment rate for Class C LP Units will be reset, and the holders of Class C LP
Units will be entitled, subject to certain conditions, to elect either a fixed rate or variable rate option.
Such redemptions of Class C LP Units (other than upon a change of control of CT REIT) can be settled at the option of the
Partnership, in cash or Class B LP Units of equal value.
The following table presents the details of the Class C LP Units:
Series
Series 3
Series 4
Series 5
Series 6
Series 7
Series 8
Series 9
Series 16
Series 17
Series 18
Series 19
Expiry of Current
Fixed Rate Period
Annual
distribution rate
during Current
Fixed Rate Period
Carrying amount at
December 31, 2023
Carrying amount at
December 31, 2022
May 31, 2025
May 31, 2024
May 31, 2028
May 31, 2031
May 31, 2034
May 31, 2035
May 31, 2038
May 31, 2025
May 31, 2025
May 31, 2025
May 31, 2025
2.37 % $
200,000 $
4.50 %
4.50 %
5.00 %
5.00 %
5.00 %
5.00 %
2.37 %
2.37 %
2.37 %
2.37 %
200,000
200,000
200,000
200,000
200,000
200,000
16,550
18,500
4,900
11,600
200,000
200,000
200,000
200,000
200,000
200,000
200,000
16,550
18,500
4,900
11,600
Weighted average / Total
4.41 % $
1,451,550 $
1,451,550
Current
Non-current
Total
200,000 $
—
1,251,550
1,451,550
$
1,451,550 $
1,451,550
CT REIT 2023 ANNUAL REPORT 81
For the year ended December 31, 2023, interest expense of $63,962 (2022 - $63,962) was recognized in respect of the Class
C LP Units (see Note 17). The holders of the Class C LP Units may elect to defer receipt of all, or a portion of distributions
declared by CT REIT until the first business day following the end of the fiscal year. If the holder so elects to defer receipt of
payments, CT REIT will loan the holder an amount equal to the deferred payment without interest, and the loan will be due
and payable in full on the first business day following the end of the fiscal year in which the loan was advanced, the holder
having irrevocably directed that any payment of the deferred payments be applied to repay such loans. At the election of the
holder, payments on the Class C LP Units for the year ended December 31, 2023 of $58,631 (2022 – $58,631), were
deferred until the first business day following the end of the fiscal year and non-interest bearing loans equal to the deferred
payments were advanced. The net amount of payments due in respect of the Class C LP Units at December 31, 2023 of
$5,331 (2022 – $5,331) is included in other liabilities on the consolidated balance sheets. The loans deferred as at
December 31, 2023 were settled on January 2, 2024.
7. MORTGAGES PAYABLE
Mortgages payable include the following:
December 31, 2023
December 31, 2022
Current
Non-current
Total
Face
value
391 $
8,473
8,864
$
Carrying
amount
Face
value
508 $
56,078 $
8,623
9,131
$
8,864
64,942
$
$
$
Future repayments are as follows:
2024
2025
2026
Total contractual obligation
Unamortized portion of mark to market on mortgages payable assumed on
the acquisition of properties
$
$
Principal
amortization
Maturities
391 $
403
103
897 $
— $
—
7,967
7,967 $
$
Carrying
amount
56,167
9,128
65,295
Total
391
403
8,070
8,864
267
9,131
The mortgages payable has an interest rate of 3.24% and a maturity date of March 2026 (December 31, 2022 weighted
average interest rate – 5.49%). As at December 31, 2023, fixed rate and variable rate mortgages were $8,864 (December 31,
2022 – $9,242) and nil (December 31, 2022 – $55,700), respectively. In Q1 2023, CT REIT repaid a mortgage which matured
in March 2023 for $55,700.
Investment properties having a fair value of $20,301 (December 31, 2022 – $150,370) have been pledged as security for
mortgages payable.
82 CT REIT 2023 ANNUAL REPORT
8. DEBENTURES
The following table presents the details of the debentures:
Series
B, 3.53%, June 9, 2025
D, 3.29%, June 1, 2026
E, 3.47%, June 16, 2027
F, 3.87%, December 7, 2027
G, 2.37%, January 6, 2031
H, 3.03%, February 5, 2029
I, 5.83%, June 14, 2028
Total
December 31, 2023
December 31, 2022
Face value Carrying amount
Face value
$
200,000 $
199,752 $
200,000 $
200,000
175,000
200,000
150,000
250,000
250,000
199,672
174,602
199,479
149,320
248,912
248,576
200,000
175,000
200,000
150,000
250,000
—
Carrying
amount
199,581
199,537
174,487
199,346
149,223
248,731
—
$
1,425,000 $
1,420,313 $
1,175,000 $
1,170,905
Debentures as at December 31, 2023, had a weighted average interest rate of 3.73% (December 31, 2022 – 3.28%).
On November 17, 2023, CT REIT completed the issuance of $250,000 of Series I unsecured debentures with a 4.6-year term
and a coupon of 5.828% per annum. The net proceeds were used to repay short term indebtedness and for general business
purposes.
For the year ended December 31, 2023, amortization of transaction costs of $905 (December 31, 2022 - $900) are included in
net interest and other financing charges on the Consolidated Statements of Income and Comprehensive Income (see Note
17).
9. LEASES
(a) CT REIT as lessee
CT REIT is the tenant under 12 ground leases with third party landlords. The remaining current terms of the ground leases are
between 3 and 32 years, with an average remaining current term of 15 years. The majority of the ground lease agreements are
renewable at the end of the current lease term. Assuming all extensions are exercised, the ground leases have remaining
terms between 20 and 50 years with an average remaining lease term of 31 years. For the calculation of lease liabilities
related to ground leases, it was determined that all lease renewal options are reasonably certain to be exercised. There are no
variable lease payments or guaranteed residual payments with respect to the ground leases.
Lease liabilities include the following:
Current
Non-current
Total
December 31, 2023
December 31, 2022
$
$
923 $
100,177
101,100 $
649
102,223
102,872
CT REIT 2023 ANNUAL REPORT 83
The decrease of $1,772 from prior year is primarily due to lease amendments, partially offset by an additional ground lease.
The contractual undiscounted cash flows of CT REIT lease liabilities are as follows:
Less than one year
Between one and five years
More than five years
Total
December 31, 2023
December 31, 2022
$
$
6,067 $
26,094
217,096
249,257
$
5,123
26,177
215,426
246,726
CT REIT has in place a leverage and liquidity policy to manage its exposure to liquidity risk associated with the contractual
lease liabilities. Details of how CT REIT manages this risk are further discussed under Note 22.
There were no expenses in 2022 and 2023 relating to leases of low-value assets or short-term leases. As well, there were no
variable lease payments included in lease liabilities at any time during 2022 and 2023.
The total cash outflow for leases in 2023 was $4,979 (2022 - $4,528).
(b) CT REIT as lessor
CT REIT leases income-producing properties (investment properties) to tenants under operating leases. The leases have
staggered terms, with a weighted average remaining current term of approximately 8.4 years. The portfolio of leases with CTC
generally contain contractual rent escalations of approximately 1.5% per year.
For most income-producing properties, the rental income is fixed under the contracts, but some leases require the lessee to
reimburse certain costs incurred by CT REIT, such as property taxes and operating costs. When this is the case, these
amounts are determined annually.
The following table sets out a maturity analysis of lease payments, showing the undiscounted lease payments to be received
after the reporting date.
Minimum lease receivable
2024
435,123
2025
434,960
2026
2027
2028
Thereafter
Total
421,626
398,591
374,471
1,840,803 $ 3,905,574
84 CT REIT 2023 ANNUAL REPORT
10. OTHER LIABILITIES
Other liabilities are comprised of the following:
Interest payable
Capital expenditures payable
Salaries and benefits payable
Automatic purchase plan 1
Deferred property tax revenue
Class C LP Unit payable 2
Other
Other liabilities
Current
Non-current
Other liabilities
1 See Note 12.
2 See Note 6
11. CREDIT FACILITIES
CT REIT’s draws on its credit facilities are comprised of the following:
Bank Credit Facility
CTC Credit Facility
(a) Bank Credit Facility
December 31, 2023
December 31, 2022
$
8,181 $
66,778
12,409
12,300
1,076
5,331
12,998
119,073
$
113,875
$
5,198
119,073
$
6,408
74,913
11,717
—
1,133
5,331
10,635
110,137
104,987
5,150
110,137
December 31, 2023
—
$
December 31, 2022
99,884
—
—
$
—
99,884
$
$
$
$
$
CT REIT has a committed, unsecured $300,000 revolving credit facility with a syndicate of Canadian banks (“Bank Credit
Facility”) maturing in September 2027. The Bank Credit Facility bears interest at a rate based on a stipulated bank prime rate
or bankers’ acceptance plus a margin. A standby fee is charged on the Bank Credit Facility.
As of December 31, 2023, the REIT had no draws on the Bank Credit Facility (December 31, 2022 - $99,884, at the weighted
average interest rate of 6.16%), and $3,132 (December 31, 2022 – $4,999) of outstanding letters of credit.
(b) CTC Credit Facility
CT REIT has an uncommitted, unsecured $300,000 revolving credit facility with CTC (“CTC Credit Facility”) maturing in
December 2024. The CTC Credit Facility bears interest at a rate based on a stipulated bank prime rate or bankers’ acceptance
plus a margin.
As of December 31, 2023, the REIT had no draws on the CTC Credit Facility (December 31, 2022 – nil).
The Bank Credit Facility and the CTC Credit Facility are herein collectively referred to as the “Credit Facilities”.
CT REIT 2023 ANNUAL REPORT 85
12. EQUITY
Authorized and outstanding units
CT REIT is authorized to issue an unlimited number of units.
The following tables summarize the changes in Units and Class B LP Units:
Total outstanding at beginning of year
Units issued under Distribution Reinvestment Plan
Units repurchased and cancelled
Total outstanding at end of period
Total outstanding at beginning of year
Units issued under Distribution Reinvestment Plan
Total outstanding at end of year
As at December 31, 2023
Units Class B LP Units
127,193,833
107,501,944
1,271,847
(452,141)
108,321,650
—
—
127,193,833
Total
234,695,777
1,271,847
(452,141)
235,515,483
Units
106,304,288
1,197,656
As at December 31, 2022
Class B LP
Units
126,880,857
Total
233,185,145
312,976
1,510,632
107,501,944
127,193,833
234,695,777
Net income attributable to unitholders and weighted average units outstanding used in determining basic and diluted net
income per unit for years ended December 31, 2023 and 2022, are calculated as follows, respectively:
For the Year ended December 31, 2023
Units
Class B LP Units
Total
Net income attributable to unitholders - basic
$
105,287 $
124,147 $
229,434
63,962
293,396
$
107,965,763
127,193,833
235,159,596
326,050
101,854,123
337,339,769
Income effect of settling Class C LP Units with Class B LP Units
Net income attributable to unitholders - diluted
Weighted average units outstanding - basic
Dilutive effect of other unit plans
Dilutive effect of settling Class C LP Units with Class B LP Units
Weighted average number of units outstanding - diluted
86 CT REIT 2023 ANNUAL REPORT
Net income attributable to unitholders - basic
$
148,264 $
176,349 $
Income effect of settling Class C LP Units with Class B LP Units
Net income attributable to unitholders - diluted
Weighted average units outstanding - basic
Dilutive effect of other unit plans
Dilutive effect of settling Class C LP Units with Class B LP Units
Weighted average number of units outstanding - diluted
Distributions on Units and Class B LP Units
For the Year ended December 31, 2022
Units
Class B LP Units
Total
324,613
63,962
388,575
$
106,893,856
127,123,521
234,017,377
288,433
93,706,035
328,011,845
The following table presents total distributions declared on Units and Class B LP Units:
For the year ended December 31,
Units
Class B LP Units
2023
2022
Distributions
per unit
Distributions
per unit
$
$
0.886 $
0.886 $
0.856
0.856
On December 15, 2023, a distribution of $0.07485 per unit payable on January 15, 2024 was declared to holders of Units and
Class B LP Units of record on December 29, 2023.
On January 15, 2024, a distribution of $0.07485 per unit payable on February 15, 2024 was declared to holders of Units and
Class B LP Units of record on January 31, 2024.
Units
Each Unit is transferable and represents an equal, undivided, beneficial interest in CT REIT and any distributions from the
REIT, whether of net income, net realized capital gains, or other amounts, and in the event of the termination or winding-up of
CT REIT, in CT REIT’s net assets remaining after satisfaction of all liabilities. All Units rank among themselves equally and
ratably without discrimination, preference or priority. Each Unit entitles the holder thereof to one vote at all meetings of
Unitholders or with respect to any written resolution of Unitholders. The Units have no conversion, retraction or redemption
rights.
Non-controlling interests
The Class B LP Units are exchangeable on a one-for-one basis (subject to customary anti-dilution provisions) for Units at the
option of the holder. Each Class B LP Unit is accompanied by a Special Voting Unit. The holders of Class B LP Units are
entitled to receive distributions when declared by the Partnership equal to the per Unit amount of distributions payable to each
holder of Units. However, the Class B LP Units have limited voting rights over the Partnership.
CT REIT 2023 ANNUAL REPORT 87
Special Voting Units
Special Voting Units are only issued (i) in tandem with Class B LP Units of the Partnership or (ii) in limited circumstances to
holders of the Class C LP Units and are not transferable separately from the Class B LP Units or Class C LP Units, as the
case may be, to which they relate. Upon any transfer of Class B LP Units or Class C LP Units, as the case may be, such
Special Voting Units will automatically be transferred to the transferee of the Class B LP Units. As Class B LP Units are
exchanged for Units or purchased for cancellation, the corresponding Special Voting Units will be cancelled for no
consideration.
Each Special Voting Unit entitles the holder thereof to one vote at all meetings of Unitholders or with respect to any resolution
in writing of Unitholders. Except for the right to attend and vote at meetings of the Unitholders or with respect to written
resolutions of the Unitholders, Special Voting Units do not confer upon the holders thereof any other rights. A Special Voting
Unit does not entitle its holder to any economic interest in CT REIT, or to any interest or share in CT REIT, or to any interest in
any distributions (whether of net income, net realized capital gains, or other amounts), or to any interest in any net assets in
the event of termination or winding-up.
CT REIT’s Board retains full discretion with respect to the timing and quantum of distributions. Declared distributions are paid
to Unitholders of record at the close of business on the last day of the month on or about the 15th day of the following month.
Normal Course Issuer Bid
On November 25, 2022, CT REIT received approval from the TSX to purchase up to 3,300,000 Units during the 12-month
period commencing November 29, 2022, and ending November 28, 2023 by way of a normal course issuer bid (“NCIB”).
During the year ended December 31, 2023, CT REIT acquired and cancelled 452,141 Units at a weighted average purchase
price of $13.99 per Unit, for a total cost of $6,332.
On November 27, 2023, a renewal of the NCIB (“2023-2024 NCIB”) was approved by the TSX to purchase up to 3,500,000
Units during the 12-month period commencing November 29, 2023, and ending November 28, 2024.
On November 27, 2023, the TSX approved an automatic purchase plan (“APP”) in connection with the 2023-2024 NCIB which
allows the REIT’s designated broker to periodically purchase Units during the REIT’s blackout periods, subject to pre-defined
parameters in accordance with the rules of the TSX and applicable securities laws. As of December 31, 2023, the maximum
obligation to repurchase Units under the APP of $12,300 was recognized in other liabilities.
At-the-Market Program
On May 25, 2023, CT REIT established an at-the-market program (the “ATM Program”) that allows the REIT to issue up to
$100,000 of Units from treasury to the public from time to time, at the REIT's discretion.
During the year ended December 31, 2023, no Units were issued under the ATM Program.
88 CT REIT 2023 ANNUAL REPORT
13. UNIT-BASED COMPENSATION PLANS
Deferred Unit Plan for Trustees
CT REIT offers a Deferred Unit (“DU”) Plan for members of its Board who are not also employees or officers of the REIT or
any of its Affiliates. Under this plan, eligible trustees may elect to receive all or a portion of their annual trustee fees in DUs.
DUs are paid out in equivalent Units of CT REIT or, at the election of the trustee, in cash, following the trustee’s departure from
the Board.
As at December 31, 2023, accrued DU compensation costs, which are included in other liabilities, totalled $4,800 (2022 –
$4,361). Compensation expense recorded related to DUs for the year ended December 31, 2023 was $(170) (2022 - $(274)).
The fair value of DUs is equal to the trading price of Units, which is a Level 1 input (see Note 22(a)).
Performance Unit Plan for Employees
CT REIT offers Performance Units (“PUs”) to certain employees that generally vest after three years. Each PU entitles the
employee to receive a cash payment equal to the fair market value of Units of CT REIT, multiplied by a factor determined by
specific performance-based criteria, as set out in the PU Plan.
As at December 31, 2023, accrued PU compensation costs, which are included in other liabilities, totalled $4,833 (2022 -
$4,691). Compensation expense recorded for the year ended December 31, 2023 for PUs granted to employees was $2,122
(2022 - $2,530). The fair value of PUs is equal to the trading price of Units, which is a Level 1 input (see Note 22(a)).
Restricted Unit Plan for Executives
CT REIT offers a Restricted Unit (“RU”) Plan for its executives. RUs may be issued as discretionary grants or executives may
elect to receive all or a portion of their short term incentive plan in RUs. At the end of the vesting period which is generally
three years from the date of grant (in the case of discretionary grants) or five years from the short term incentive plan bonus
payment date (in the case of deferred bonus grants), the executives will receive an equivalent number of Units issued by CT
REIT or, at the executive’s election, the cash equivalent thereof.
As at December 31, 2023, accrued RU compensation costs, which are included in other liabilities, totalled $365 (2022 - $428).
Compensation expense for the year ended December 31, 2023 was $140 (2022 - $143). The fair value of RUs is equal to the
trading price of Units, which is a Level 1 input (see Note 22(a)).
CT REIT 2023 ANNUAL REPORT 89
14. NON-CONTROLLING INTERESTS
Details of non-wholly owned subsidiaries of CT REIT that have material non-controlling interests are as follows:
Proportion of ownership
Net income and
comprehensive income
interests held by non- allocated to non-controlling
interests
controlling interests
As at
As at
For the year
ended
For the year
ended
December December 31, December December 31,
31, 2023
31, 2023
2022
2022
Name of Subsidiary
CT REIT Limited Partnership
54.01 %
54.20 % $
124,147 $
176,349
There are no restrictions on CT REIT’s ability to access or use the assets and settle the liabilities of its subsidiaries and there
are no contractual arrangements that could require CT REIT to provide financial support to its subsidiaries.
15. REVENUES AND EXPENSES
(a) Property revenue
The components of property revenue are as follows:
Base minimum rent
Straight-line rent
Subtotal base rent
Property operating expense recoveries
Capital expenditure and interest recovery charge
Other revenues
Property revenue
Base minimum rent
Straight-line rent
Subtotal base rent
Property operating expense recoveries
Capital expenditure and interest recovery charge
Other revenues
Property revenue
90 CT REIT 2023 ANNUAL REPORT
$
$
CTC
Other
386,032 $
38,447 $
(2,128)
421
383,904 $
38,868 $
90,376
20,034
7
17,894
288
1,401
$
494,321 $
58,451 $
For the Year ended
December 31, 2023
424,479
(1,707)
422,772
108,270
20,322
1,408
552,772
CTC
371,651 $
1,142
Other
36,735 $
702
372,793 $
37,437 $
$
$
88,458
14,595
5
18,229
183
1,095
$
475,851 $
56,944 $
For the Year ended
December 31, 2022
408,386
1,844
410,230
106,687
14,778
1,100
532,795
(b) Property expense
The major components of property expense consist of property taxes and other recoverable operating costs:
For the year ended December 31,
Property taxes
Operating costs
Property expense
16. GENERAL AND ADMINISTRATIVE EXPENSE
General and administrative expense is comprised of the following:
For the year ended December 31,
Personnel expense 1 Service
Agreement expense 2 Public
entity and other 1
General and administrative expense
2023
95,145 $
20,378
115,523 $
2022
91,524
19,609
111,133
2023
9,825
1,094
4,318
2022
9,708
1,094
3,676
15,237 $
14,478
$
$
$
$
¹ Includes unit-based awards, including (gain) loss adjustments as a result of the change in the fair market value of the Units of $(625) (2022 - $(866)) for the year ended December 31,
2023.
2 See Note 21.
17. NET INTEREST AND OTHER FINANCING CHARGES
Net interest and other financing charges are comprised of the following:
For the year ended December 31,
Interest on Class C LP Units 1
Interest and financing costs - debentures
Interest and financing costs - Credit Facilities 2
Interest on mortgages payable
Interest on lease liabilities
Less: capitalized interest
Interest expense and other financing charges
Less: interest income
Net interest and other financing charges
1 Paid or payable to CTC.
2 See Note 21.
$
$
$
$
2023
63,962 $
41,240
8,905
938
5,201
120,246
$
(5,764)
114,482
$
(540)
113,942 $
2022
63,962
39,968
2,042
2,377
3,964
112,313
(1,641)
110,672
(256)
110,416
CT REIT 2023 ANNUAL REPORT 91
18. CHANGES IN WORKING CAPITAL AND OTHER
Changes in working capital and other are comprised of the following:
For the year ended December 31,
Changes in working capital and other
Tenant and other receivables
Other assets
Other liabilities
Other
Year ended
2023
$
279 $
(353)
2,017
(638)
Changes in working capital and other
$
1,305 $
2022
(850)
(916)
(2,898)
(1,288)
(5,952)
19. SEGMENTED INFORMATION
CT REIT has one segment for financial reporting purposes which comprises the ownership and management of primarily net
lease single tenant retail investment properties located across Canada.
20. COMMITMENTS AND CONTINGENCIES
CT REIT has agreed to indemnify, in certain circumstances, the trustees and officers of CT REIT and its subsidiaries.
As at December 31, 2023, CT REIT had obligations of $171,513 (December 31, 2022 – $245,547) in future payments for the
completion of developments. Included in the commitments is $163,042 due to CTC.
21. RELATED-PARTY TRANSACTIONS
In the normal course of operations, CT REIT enters into various transactions with related parties that have been measured at
amounts agreed to between the parties and are recognized in the consolidated financial statements.
(a) Arrangements with CTC
Services Agreement
Under the services agreement between the Partnership and CTC entered into on October 23, 2013, as amended and
restated as of August 8, 2023 (“Services Agreement”), CTC provides the REIT with certain administrative, information
technology, internal audit and other support services as may be reasonably required from time to time (the “Services”). CTC
provides these Services to the REIT on a cost recovery basis pursuant to which CT REIT reimburses CTC for all costs and
expenses incurred by CTC in connection with providing the Services, plus applicable taxes. The Services Agreement is
automatically renewable for one year terms, unless otherwise terminated in accordance with its terms. The Services
Agreement was automatically renewed for 2024 and CTC will continue to provide such Services on a cost recovery basis.
92 CT REIT 2023 ANNUAL REPORT
Property Management Agreement
Under the property management agreement, between the Partnership and CTC entities entered into on October 23, 2013, as
amended and restated as of August 8, 2023 (“Property Management Agreement”), CTC provides the REIT with certain
property management services (the ‘‘Property Management Services’’). CTC provides these Property Management Services to
the REIT on a cost recovery basis pursuant to which the REIT reimburses CTC for all costs and expenses incurred by CTC in
connection with providing the Property Management Services, plus applicable taxes. The Property Management Agreement is
automatically renewable for one year terms, unless otherwise terminated in accordance with its terms. The Property
Management Agreement was automatically renewed for 2024 and CTC will continue to provide such Property Management
Services on a cost recovery basis.
CTC Credit Facility
CT REIT has a Credit Facility with CTC that was entered into on December 18, 2019 and which is automatically renewed for
one year terms, unless otherwise terminated in accordance with its terms. The CTC Credit Facility was automatically renewed
in December 2023 and expires on December 31, 2024. The CTC Credit Facility bears interest at a rate based on a stipulated
bank prime rate or bankers’ acceptance, plus a margin.
(b) Transactions and balances with related parties
Transactions with CTC are comprised of the following, excluding acquisition, intensification and development activities with
CTC which are contained in Note 4:
For the year ended December 31,
Rental revenue
Property Management and Services Agreement expense
Distributions on Units
Distributions on Class B LP Units 1
Interest expense on Class C LP Units
Interest expense on the CTC Credit Facility
1 Includes distributions deferred at the election of the holders of the Class B LP Units.
The net balance due to CTC is comprised of the following:
As at
Tenant and other receivables
Class C LP Units
Amounts payable on Class C LP Units
Loans receivable in respect of payments on Class C LP Units
Other liabilities
Distributions payable on Units and Class B LP Units 1
Loans receivable in respect of distributions on Class B LP Units
Year ended
Note
2023
2022
15 $
494,321 $
475,851
$
$
$
1,575 $
1,550
30,100 $
29,092
112,637 $
108,827
17 $
17 $
63,962 $
63,962
1,661 $
958
December 31, 2023
December 31, 2022
$
(2,613) $
1,451,550
63,962
(58,631)
50,514
37,363
(25,298)
(1,331)
1,451,550
63,962
(58,631)
48,713
36,066
(24,409)
Net balance due to CTC
$
1,516,847 $
1,515,920
1 Includes distributions deferred at the election of the holders of the Class B LP Units.
CT REIT 2023 ANNUAL REPORT 93
(c) Compensation of executives and independent trustees
The remuneration of the Chief Executive Officer, Chief Financial Officer, Senior Vice President Real Estate, Chief Operating
Officer1 and the trustees who were not employees or officers of the REIT or any of its affiliates, is as follows:
For the year ended December 31,
Salaries and short-term employee benefits
Unit-based awards 2
Total
$
$
2023
3,070 $
1,102
4,172
$
2022
3,485
1,154
4,639
1 Chief Operating Officer was a position for part of 2022.
2 Unit-based awards, as described in Note 13, includes (decrease)/increase in expense as a result of the change in the fair market value of the Units of ($446) (2022 - ($793)).
The remuneration of the Chief Executive Officer, Chief Financial Officer, Senior Vice President Real Estate and Chief
Operating Officer consist principally of base salary, short-term cash incentives and long-term incentives (in the form of unit-
based awards). The remuneration is determined by CT REIT’s Board of Trustees, on the recommendation of the Governance,
Compensation and Nominating Committee.
The compensation of trustees, who are not employees or officers of CT REIT or any of its affiliates, consists of an annual
retainer and meeting fees.
22. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
a) Fair value of financial instruments
For financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which
the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its
entirety, which are described as follows:
•
•
•
Level 1 inputs: Are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date;
Level 2 inputs: Are inputs, other than quoted prices included within Level 1, that are observable for the asset or
liability, either directly or indirectly; and
Level 3 inputs: Are unobservable inputs for the asset or liability.
The fair values of the Class C LP Units and mortgages payable are determined by discounting contractual principal and
interest payments at estimated current market interest rates for the instrument. Current market interest rates are determined
with reference to current benchmark rates for a similar term and current credit spreads for debt with similar terms and risks.
The fair value of each of the Class C LP Units, debentures and mortgages payable at December 31, 2023, was $1,384,302,
$1,358,464 and $8,682, respectively. The fair value measurement of the Class C LP Units and mortgages payable is based on
Level 2 inputs. The significant inputs used to determine the fair value of the Class C LP Units and mortgages payable are
interest rates, term to maturity, and credit spreads. The debentures are actively traded on the secondary market and the fair
value is determined using Level 1 inputs. There have been no transfers during the period between levels.
Financial assets consist of cash and cash equivalents, and tenant and other receivables which are classified at amortized cost.
Financial liabilities, other than those discussed in the preceding paragraph, consist of other liabilities, Credit Facilities and
94 CT REIT 2023 ANNUAL REPORT
distributions payable, which are carried at amortized cost, except for liabilities for unit-based compensation plans which are
included in other liabilities and are carried at fair value, equivalent to the trading price of Units, which is a Level 1 input.
(b) Financial risk management
In the normal course of business, CT REIT has exposure to risks from its use of financial instruments. CT REIT is exposed to
liquidity and credit risk in connection with its financial instruments. Financial risk management policies are established for CT
REIT to identify and analyze the risks faced by CT REIT, to set acceptable risk tolerance limits and controls and to monitor
risks and adherence to limits. CT REIT is not exposed to significant currency or market risk arising from financial instruments.
Additionally, CT REIT’s exposure to interest rate changes is limited as a significant portion of its indebtedness is at fixed
interest rates. Exposure to variable interest rates is dependent on the extent to which CT REIT has short term borrowings
under its credit facilities, any new debt is issued or assumed on acquisitions, new series of Class C LP Units are issued to
finance future real estate transactions or any existing Class C LP Units being re-priced or redeemed, as all are market
dependent (see Note 6).
Liquidity risk
Liquidity risk is the risk that CT REIT will encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset. CT REIT’s approach to managing liquidity is to ensure that it has
sufficient liquidity available through cash, assets readily convertible to cash and committed bank lines of credit to support its
monthly cash distributions to Unitholders, meet operating and plan requirements and meet unexpected financial challenges.
CT REIT has in place a leverage and liquidity policy to manage its exposure to liquidity risk.
Management has identified key financial credit metric ratios and calculates these ratios in a manner to approximate the
methodology of two credit rating agencies (S&P and Morningstar DBRS). Management monitors these metrics against the
credit rating agencies’ targets to maintain investment-grade ratings.
CT REIT uses a detailed consolidated cash flow forecast model to regularly monitor its near-term and longer-term cash flow
requirements, which assists in optimizing its cash distributions to Unitholders and evaluating longer-term funding strategies.
CT REIT has access to several financing sources to ensure that the appropriate level of liquidity is available to meet its
monthly distributions and growth objectives, including both its committed and uncommitted Credit Facilities, each totaling
$300,000, direct access to debt and equity markets (subject to consent from CTC), and cash on hand.
Credit risk
Credit risk is the risk of financial loss if a counterparty to a financial instrument fails to meet its contractual obligations and
arises principally from CT REIT’s tenants (which may experience financial difficulty and be unable to meet their lease
obligations) and from investment securities counterparties. CTC is CT REIT’s most significant tenant and will be for the
foreseeable future. CT REIT’s revenues are largely dependent on the ability of CTC to meet its rent obligations.
CT REIT has a Financial Risk Management Board Policy in place for management of counterparty risk related to investing
activity. The overall credit risk compliance mechanisms established in this policy include credit rating requirements, approval
authorities, counterparty limits, notional limits, term to maturity and portfolio diversification requirements. CT REIT limits its
CT REIT 2023 ANNUAL REPORT 95
exposure to credit risk by investing only in highly liquid and rated term deposits, bankers’ acceptances or other approved
securities and only with highly rated financial institutions and government counterparties.
Interest rate risk
Interest rate risk is the potential for financial loss arising from increases in interest rates. CT REIT has minimal exposure to
interest rate changes as the initial rate on the Class C LP Units, debentures and certain mortgages payable are at fixed
interest rates. CT REIT incurs variable rate indebtedness through certain mortgages payable and borrowings under its Credit
Facilities. CT REIT currently has nil (2022 - $99,884) in short-term borrowings outstanding under its Credit Facilities. CT REIT
may incur indebtedness in the future that bears interest at a variable interest rate or may be required to issue new debt or
refinance existing debt at higher interest rates.
23. CAPITAL MANAGEMENT AND LIQUIDITY
CT REIT’s objectives when managing capital are to ensure access to capital and sufficient liquidity is available to meet its
financial obligations when due, support ongoing property operations, developments and acquisitions while generating reliable,
durable and growing monthly cash distributions on a tax-efficient basis to maximize long-term unitholder value.
The definition of capital varies from entity to entity, industry to industry and for different purposes. CT REIT’s strategy and
process for managing capital is driven by requirements established under its declaration of trust as amended and restated as
of October 22, 2013 and as further amended and restated as of April 5, 2020 and as may be further amended from time to
time (“Declaration of Trust”), the trust indenture dated June 9, 2015, as supplemented by supplemental indentures thereto
(collectively, the “Trust Indenture”) and the Credit Facilities.
As at December 31, 2023, CT REIT was in compliance with the financial covenants contained in the Declaration of Trust, the
Credit Facilities, and the Trust Indenture.
The following schedule details the capitalization of CT REIT:
As at
Liabilities
Class C LP Units
Mortgages payable
Debentures
Credit Facilities
Equity
Unitholders’ equity
Non-controlling interests
Total
December 31, 2023
December 31, 2022
$
1,451,550 $
1,451,550
9,131
1,420,313
—
1,707,336
2,140,433
$
6,728,763 $
65,295
1,170,905
99,884
1,698,250
2,128,923
6,614,807
CT REIT’s Class C LP Units have a fixed, cumulative, preferential cash distribution, if, as and when declared by the board of
directors of the GP.
96 CT REIT 2023 ANNUAL REPORT
Under the Declaration of Trust, the Trust Indenture, and the Credit Facilities, key financial covenants are reviewed on an
ongoing basis by management to monitor compliance with the agreements. The key financial covenants for CT REIT are as
follows:
•
a requirement to maintain, at all times:
◦
◦
◦
◦
◦
a specified maximum ratio of total indebtedness of CT REIT (plus the aggregate par value of the Class C LP
Units) to gross book value of assets
a specified maximum ratio of total secured indebtedness of CT REIT (plus the aggregate par value of the
Class C LP Units) to gross book value of assets
a minimum Unitholders’ equity
a ratio of unencumbered assets to unconsolidated unsecured indebtedness
a specified minimum debt service coverage ratio defined as earnings before interest and taxes as a
percentage of interest expense, which for greater clarity includes payments on the Class C LP Units
As at December 31, 2023, CT REIT was in compliance with all of its financial covenants. Under these financial covenants, CT
REIT has sufficient flexibility to fund business growth and maintain or amend distribution rates within its existing distribution
policy.
CT REIT’s strategy is to satisfy its liquidity needs using cash flows generated from operating activities and cash provided by
financing activities. Rental income, recoveries from tenants, interest and other income, draws on the Credit Facilities and
further issuance of debt and equity are CT REIT’s principal sources of liquidity used to pay operating expenses, distributions,
debt service, and recurring capital and leasing costs for its properties.
The principal liquidity needs for periods beyond the next year are for redemptions of Class C LP Units upon scheduled expiry
of the Initial Fixed Rate Period, refinancing and interest on debentures, capital expenditures, Credit Facilities and Unit
distributions. CT REIT’s strategy is to meet these needs through cash flows generated from operating activities and further
issuance of debt and equity.
CT REIT 2023 ANNUAL REPORT 97
The following table presents the contractual maturities of CT REIT’s financial liabilities:
Class C LP Units 1
Debentures
Total
2024
2025
2026
2027
2028
2029 and
thereafter
$ 1,451,550 $ 200,000 $ 251,550 $
— $
— $ 200,000 $
800,000
1,425,000
—
200,000
200,000
375,000
250,000
400,000
Payments on Class C LP Units 1
488,613
58,712
51,484
49,000
49,000
43,750
236,667
Interest on debentures
214,435
53,132
49,605
42,789
36,464
17,759
14,686
Future undiscounted lease liabilities payments
249,257
6,067
6,425
Mortgages payable
Other liabilities
Distributions payable 2
Payable on Class C LP Units, net of loans
receivable
Interest on mortgages payable
8,864
391
403
105,237
100,039
5,198
17,628
17,628
—
5,331
5,331
612
280
—
267
6,550
8,070
—
—
—
65
6,568
6,551
217,096
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Total
$ 3,966,527 $ 441,580 $ 564,932 $ 306,474 $ 467,032 $ 518,060 $ 1,668,449
1 Assumes redemption on Current Fixed Rate Period for each series.
2 On Units and Class B LP Units.
98 CT REIT 2023 ANNUAL REPORT
GLOSSARY OF TERMS
Glossary of Terms
“Affiliate” means an affiliate, as such term is defined in the Securities Act (Ontario) of CT REIT (including a partnership or
trust controlled by the REIT).
“AFFO” is a non-GAAP financial measure and has the meaning given to that term in Real Property Association of Canada
(“REALPAC”) under its publications, “REALPAC Funds From Operations & Adjusted Funds From Operations for
IFRS” (“REALPAC FFO & AFFO”). It is calculated as FFO subject to certain adjustments to remove the impact of recognizing
property rental revenues or expenses on a straight-line basis, and the deduction of a reserve for normalized maintenance
capital expenditures, tenant inducements and leasing commissions.
“Atlantic Canada” means the provinces of New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward
Island.
“Board” means the Board of Trustees of the REIT.
“Change of Control” means the acquisition by a person, or group of persons acting jointly or in concert, directly or indirectly,
other than CTC or any of its Subsidiaries, of more than 50% of the aggregate voting rights attached to the Units and Special
Voting Units of the REIT (taking into account (i) full dilution from the exchange of all then-outstanding Class B LP Units into
Units of the REIT; and (ii) in respect of any other securities that are convertible or exchangeable into Units of the REIT, only
dilution resulting from the conversion or exercise of such other convertible or exchangeable securities held by such person or
group of persons).
“Class A LP Units” means, collectively, the Class A limited partnership units of the Partnership. “Class A LP Unit” means any
one of them.
“Class B LP Units” means, collectively, the Class B limited partnership units of the Partnership, and “Class B LP Unit” means
any one of them.
“Class C LP Units” means, collectively, the Class C limited partnership units of the Partnership, and “Class C LP Unit” means
any one of them.
“Competitor” means a person who carries on business, or any person who controls or is controlled by such person, in one or
more of the following categories: hardware, automotive, sporting goods, apparel and housewares.
“CTC” means Canadian Tire Corporation, Limited together with its Subsidiaries (excluding the REIT and the REIT’s
Subsidiaries), or, as the context requires, any of them.
“CTC Banner” means a CTC name or trademark, including the Canadian Tire, Mark’s , Sport Chek, Sports Experts and
Atmosphere, names or trademarks.
CT REIT 2023 ANNUAL REPORT 99
GLOSSARY OF TERMS
“CTREL” means Canadian Tire Real Estate Limited, a wholly-owned Subsidiary of CTC.
“Development Agreement” means the development agreement among the REIT, the Partnership, CTREL and CTC entered
into on October 23, 2013, as further described under “Arrangements with CTC - Commercial Agreements with CTC -
Development Agreement” of the AIF.
“Development Properties” means those Properties being developed or redeveloped, but excludes properties undergoing
intensification activities, consisting of the construction of additional buildings on existing assets and modifications to existing
buildings, as well as the redevelopment of mixed-use properties.
“EBITFV” is a non-GAAP measure of operating cash flow. It is calculated as net income in accordance with GAAP, adjusted by
removing the impact of; (i) non-cash adjustments including fair value adjustments on investment properties; (ii) interest
expense and other financing costs; (iii) income tax expense; (iv) gains or losses the sale of investment properties; and (v) non-
recurring items that may occur under IFRS.
“ECL” means expected credit losses.
“FFO” is a non-GAAP financial measure and has the meaning given to it in the REALPAC FFO & AFFO. It is calculated as net
income in accordance with GAAP, adjusted by removing the impact of: (i) fair value adjustments on investment properties; (ii)
other fair value adjustments; (iii) gains and losses on the sale of investment properties; (iv) incremental leasing costs; (v)
operational revenue and expenses from right-of-use assets; and (vi) deferred taxes.
“FVTPL” means fair value through profit or loss.
“GAAP” means generally accepted accounting principles in Canada (which for Canadian reporting issuers is IFRS) as in effect
from time to time and as adopted by the REIT from time to time for the purposes of its public financial reporting.
“GLA” means gross leasable area.
“Gross Book Value” means at any time the total assets of the REIT as shown in its then most recent Consolidated Balance
Sheets.
“IFRS” means International Financial Reporting Standards as issued by the International Accounting Standards Board and as
adopted by the Chartered Professional Accountants of Canada in Part I of The CPA Canada Handbook - Accounting, as
amended from time to time.
“Intensification” means the development of a property, site or area at a higher density than currently exists, through
development, redevelopment, infill and expansion or conversion of existing buildings.
“Investment Properties” means the portfolio of properties owned by the REIT
100 CT REIT 2023 ANNUAL REPORT
GLOSSARY OF TERMS
“NOI” means property revenue less property expense and is further adjusted for straight-line rent.
“Property Management Agreement” means the property management agreement among the Partnership, CTC and CTREL
entered into on October 23, 2013, as further described under “Arrangements with CTC - Commercial Agreements with CTC -
Property Management Agreement” of the AIF.
“Properties Under Development” means that portion of any (i) Development Property, (ii) Properties undergoing
intensification activities, consisting of the construction of additional buildings on existing assets and modifications to existing
buildings, and (iii) mixed use properties being developed or redeveloped.
“REIT Exception” means the exclusion from the definition of “SIFT trust” in the Tax Act for a trust qualifying as a “real estate
investment trust” under the Tax Act.
“ROFO Agreement” means the right of first offer agreement among the REIT, the Partnership and CTC entered into on
October 23, 2013, as described under “Arrangements with CTC - Commercial Agreements with CTC” of the AIF.
“Services Agreement” means the services agreement among the REIT, the Partnership and CTC entered into on October 23,
2013 pursuant to which CTC or certain of its Subsidiaries provide the Services, as further described under “Arrangements with
CTC - Commercial Agreements with CTC - Services Agreement” of the AIF.
“SIFT Rules” means the specified investment flow-through rules applicable to SIFT trusts and SIFT partnerships in the Tax
Act.
“Special Voting Units” means special voting units of the REIT, and “Special Voting Unit” means any one of them.
“Unitholders” means holders of Units, and “Unitholder” means any one of them.
“Units” means trust units in the capital of the REIT, other than Special Voting Units, and “Unit” means any one of them.
CT REIT 2023 ANNUAL REPORT 101
Intentionally Left Blank
FEATURED ON THIS PAGE: Canadian Tire Store, Grande Prairie, Alberta
2023
HIGHLIGHTS
99.1%
OCCUPANCY
+3.5%
DISTRIBUTION
INCREASE
839K
SQUARE FEET
ADDED TO
PORTFOLIO
+3.7%
PROPERTY
REVENUE
+2.5%
SAME STORE
NET OPERATING
INCOME (NOI)1
+4.3%
SAME PROPERTY
NOI1
+4.6%
NOI1
+4.9%
AFFO PER UNIT
DILUTED
(NON-GAAP)2
-26.6%
NET INCOME
PER UNIT
DILUTED
+0.2%
NET ASSET
VALUE (NAV)
PER UNIT3
1.1%
IMPROVEMENT
IN AFFO
PAYOUT RATIO2
1 Non-GAAP fnancial measure. Refer to Section 10.1 of the REIT’s 2023 Management’s Discussion & Analysis
included in this Annual Report.
2 Non-GAAP ratio. Refer to Section 10.2 of the REIT’s 2023 Management’s Discussion & Analysis included in this
Annual Report.
3 NAV/unit is equivalent to GAAP book value per unit.
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CT Real Estate Investment Trust
2180 Yonge Street, P.O. Box 770, Station K, Toronto, Ontario, Canada M4P 2V8